Wealth & Finance September 2016 by AI Global Media

Wealth & Finance International | September 2016

Have Hope and Don’t Give Up Following on from the firm’s recent 10th anniversary, Dr. Andy Khawaja reflects on the phenomenal impact his firm has had and where he sees it going in the future, such as plans to put it on the New York Stock Exchange by the second quarter of 2017. PAGE 50

Go Beyond Traditional Banking Luigi Wewege, CEO of Vivier & Co explains the firm’s personal approach to preserving and growing your wealth through its core service of savings accounts featuring above average returns, without market volatility risk. Vivier is a multinational financial services group of companies providing its services through regions across Africa, Asia, Oceania, Europe and South America. PAGE 60

www.wealthandfinance-intl.com

Editor’s Comment

Wealth & Finance | September 2016

Welcome to the September edition of Wealth & Finance International magazine. On wealth, according to a September report on wealth transfers released by Wealth-X and NFP, ultra-high net worth (UHNW) individuals across the globe will transfer more than $3.9 trillion between generations over the next decade — enough to purchase the 10 largest companies in the world outright. Turning to finance, income is becoming ever scarcer in a world dominated by interventionist central bank policy and sliding growth rates, according to WisdomTree. They go on to say that the historic Brexit vote has exacerbated the situation, with yields on safe haven government debt plunging to record lows in the UK, and curtailing any rise for interest rates. Staying on the theme of Brexit, John Bagshaw of Connells Survey & Valuation says that, “the market’s fears over the impact of Brexit are calming, too and the Bank of England’s decision to cut the base rate last month for the first time in seven years may also have a psychological impact on property investors.” According to the AmTrust Moneyfacts Mortgage Loan to Value (LTV) Tracker, many first-time buyers would have hoped that the prediction of Brexit leading to house prices falling would come to fruition, giving them a better chance of getting a foothold on the housing ladder. Unfortunately, the opposite could actually be occurring, as not only are first-time buyer (FTB) house prices rising, but availability of suitable mortgages is beginning to dip.

Have Hope and Don’t Give Up Allied Wallet

I hope you enjoy reading the wide array of views and opinions expressed in this edition. Jonathan Miles, Editor

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Contents 48. A Differentiated Approach 50. Have Hope and Don’t Give Up

4. News WEALTH MANAGEMENT 10. WMA Selects MSCI for Private Investor Index Series 11. When UK Fixed Income Yields Are down, Where to Turn?

ALTERNATIVE INVESTMENT 55. Fitch Closed-End Fund Financing Shifts on Regulatory Fallout 56. Gemini Alt Surpasses $500 Million in Assets on Managed Account Platform

WEALTH PRESERVATION 12. WMA Fintech Conference 2016 Evolution, Not Revolution 14. Wealth-X and NFP Unveil Second Family Wealth Transfer Report

BANKING 57. NPL Initiative Website Will Be Information Hub for Emerging Europe’s Banking Sector 58. Analysis of UK Company Long-Term Debt and Charges Reveals Strong Challenger Bank Lending 59. Shaping the next Generation of Digital Banking 60. Go Beyond Traditional Banking 62. A Capital Fellow

ASSET MANAGEMENT 16. Alternative Asset Managers and Investors Deepen Partnership Through Greater Alignment of Interest 18. A Multi Asset View by Barings - Aim Higher 22. Investor Demand for EM Debt Set to Rise on Diversification Benefits and Attractive Valuations, Survey Shows 23. Asset Manager Revenue and Operating Margins Recover Solidly in Second Quarter 24. Quod Financial Launches FX Solution for Regional Banks and Asset Managers 25. Net Sales of UCITS See Strong Rebound in Q2 2016

MORTGAGES 64. Difficult Times Ahead for First-Time Buyers 65. A Month on from Base Rate - Mortgages MARKETS 66. Are the Capital Markets Headed for a Major Correction and Will Hedge Funds Help or Hurt 70. New Survey Reveals That a Wave of IPOs Could Hit Global Markets Within the next 12 Months 71. Venture Capital Fund Managers See Growing Appetite

PRIVATE WEALTH & INVESTMENT 26. How Much Money Does It Take to Be Happy? 27. Buy-To-Let Surges in Post Brexit Bounce 28. Specialists in Project Development, Trade and Finance 30. Sammedia Limited 32. First Port of Call 34. Balancing the Books 36. Unique Investment Opportunities 38. Pioneering Investments

TAX 72. Brexit Changes to EU VAT Will Substantially Affect Businesses 74. Naming and Shaming Multinationals Is Not the Answer 76. Apple Corporation Tax Ruling 77. Avalara EMEA Summit Explores Future of VAT Automation

RETIREMENT 42. Survey Reveals Disconnect Between Retirement Income Expectations and Reality 44. The Worst Ever Year for Annuity Income 45. Pensions Dashboard Prototype to Be Ready by Spring ‘17

LEGAL & REGULATION 78. What will the UK’s post-Brexit Landscape mean for M&A? 80. Intellectual Property Minister Encourages Further IP Collaboration Between UK and China 82. Standing at the Brexit Crossroads 86. First Choice for Legal Assistance in Romania 88. Inspiring Customers to Celebrate Living

FUND MANAGEMENT 46. Fidelity to Launch Its First Suite of Factor-Based ETFs 47. Equity Crowdfunding Comes of Age

PERSONNEL 90. Building the Right Team 93. A Home from Home 94. Winners’ Directory

Wealth & Finance | September 2016

Net Sales of UCITS See Strong Rebound in Q2 2016 The European Fund and Asset Management Association (EFAMA) on 12th September published its latest Quarterly Statistical Release describing the trends in the European investment fund industry in the second quarter of 2016.

The Highlights of the developments in Q2 2016 include: • Net sales of UCITS rebounded to €71 billion, from net outflows of €7 billion in Q1 2016. • Long-term UCITS, i.e. UCITS excluding money market funds, posted net inflows of €44 billion, compared to net outflows of €5 billion in Q1 2016. 1. Equity funds continued to record net outflows, that is €18 billion compared to €4 billion in Q1 2016. 2. Net sales of multi-asset funds increased to €14 billion, from €6 billion in Q1 2016. 3. Net sales of bond funds rebounded to €42 billion, from net outflows of €9 billion in Q1 2016. 4. Net sales of other UCITS increased to €5 billion, from €2 billion in Q1 2016. • UCITS money market funds experienced net inflows of €28 billion, against net outflows of €2 billion in Q1 2016. • AIF net sales increased to €55 billion, from €43 billion in Q1 2016. 1. Net sales of equity funds fell to €3.7 billion, from €6.7 billion in Q1 2016. 2. Net sales of multi-asset funds fell to €15.2 billion, from €20.3 billion in Q1 2016. 3. Net sales of bond funds rebounded to €7.3 billion, from net outflows of €170 million in Q1 2016. 4. Net sales of real estate funds fell to €3.3 billion, from €8.0 billion in Q1 2016. 5. Net sales of other AIFs increased to €22.5 billion, from €11.5 billion in Q1 2016. • Total European investment fund net assets increased by 2.1% in Q2 2016 to €13,290 billion.

Net assets of UCITS went up by 1.7% to €8,073 billion, and total net assets of AIFs increased by 2.8% to €5,217 billion. Bernard Delbecque, senior director for economics and research at EFAMA commented: “Net sales of UCITS rebounded during the second quarter of 2016 thanks a signification increase in the demand for bond funds and money market funds, which can be partly explained by the low interest rate environment and renewed expectations of further falls in interest rates.” For more information about EFAMA, please visit www.efama.org

NEWS

EQ Investors Positive Impact Portfolios Made Available on Alliance Trust Savings Platform EQ Investors (EQ) announces that its specialist Positive Impact Portfolios are now available to advisers through the Alliance Trust Savings platform. The addition of EQ’s discretionary managed portfolios, which provide access to socially responsible investments alongside attractive financial returns, brings impact investing to Alliance Trust Savings’ platform for the first time.

Established in 2012, the portfolios are designed to meet the growing investor appetite for an investment approach which not only delivers an attractive return but is also committed to making a positive contribution to society or the environment. EQ’s portfolios contain typically 20-25 socially responsible funds, covering a range of styles, asset classes and fund management groups.

The Positive Impact Portfolios are also available via the Novia platform and the Simply EQ service.

Key features of EQ’s Positive Impact Portfolios include: • Seven risk profiles with the maximum equity exposure ranging from 35% to 100%; • Independent research team conducting financial and socially responsible due diligence; • Available in ISA, SIPP or GIA accounts; • Annual management charge of 0.35% plus VAT; • Investing only in FCA authorised and recognised funds offering daily liquidity. Commenting on the announcement, John Spiers, chief executive of EQ, said: “Our unique Positive Impact Portfolios have been a terrific success since their launch in 2013, in line with growing evidence that companies run in a sustainable and responsible manner generate higher returns. “We are committed to working with advisers and ensuring the portfolios are available to their clients where possible. The inclusion of our Positive Impact Portfolio services on the Alliance Trust Savings platform is further evidence of our continuing support to advisers. We are pleased that we have bought socially responsible investing to the platform for the first time.” Sara Wilson, head of platform proposition at Alliance Trust Savings, added: “We are delighted to welcome EQ as our latest DFM partner. Feedback from intermediaries is that having access to a range of model portfolios from leading DFMs is becoming increasingly important in meeting individual client investment needs and EQ’s focus on socially responsible investing fits well with our proposition.”

Wealth & Finance | September 2016

PMI Appointed as the End Point Assessment Organisation for the Workplace Pensions Trailblazer Apprenticeship The UK’s Pensions Management Institute (PMI) announced in September that it has been appointed as the end point assessment organisation for the Workplace Pensions Trailblazer Apprenticeship. This means that the PMI will sign off each apprentice as having completed the standard and met the requirements. Commenting on the new Trailblazer Apprenticeship, Gareth Tancred, CEO of the PMI said: “Many employers in the sector believe Trailblazer apprenticeships will help them to access the talent they need to develop and grow. This talent may not be present in traditional recruitment pools and will encourage social mobility”

It is envisaged that the end point assessment work will begin in 2017. Neil continued: “In order to deliver the new style apprenticeship, a new role has emerged and we are looking for appropriately qualified individuals, with relevant pensions experience, assessment and verification type skills who might be interested in supporting and coaching individuals on their learning journey”

The PMI has been central to the development of a new style ‘Trailblazer’ apprenticeship, for a Trainee Pensions Administrator/Consultant. This has now been approved by the Department for Education and is attracting a lot of interest from employers.

Further details can be found here: http://www.pensions-pmi.org.uk/qualifications-and-learning/pmi-and-apprenticeships/

Commenting on the PMI’s appointment, Neil Scott, head of professional standards said: “The creation of the Workplace Pensions Trailblazer Apprenticeship will help to provide a clear route for career progression that incorporates existing and established PMI qualifications and complements the PMI membership structure”

NEWS

Historic First as Housing Associations Tenants Buy Homes For the first time, housing association tenants have become homeowners under the new Voluntary Right to Buy scheme. Sasha Dudley and partner Peter Taylor in Croydon, are some of the first tenants to benefit from one of the 5 associations piloting the new rights ahead of the scheme going nationwide.

The voluntary agreement between government and housing associations will give householders the chance to purchase their home with Right to Buy discounts. The pilot is being used to develop the national scheme.

• L&Q – Croydon LBC, Enfield LBC, Greenwich LBC, Haringey LBC, Lambeth LBC, Lewisham LBC, Newham LBC, Southwark LBC; • Riverside – Liverpool CC, Halton BC, Knowsley MBC, Sefton MBC, St Helens MBC, Wirral MBC • Saffron Housing – South Norfolk DC; • Sovereign – Cherwell DC, West Oxfordshire DC, Vale of White Horse DC, South Oxfordshire DC; • Thames Valley Housing Association – Guildford BC, Hart DC, Runnymede BC, Rushmoor BC, Woking BC.

Under the deal reached with the sector, when the main scheme is rolled out every home sold will be replaced nationally with an additional new property increasing the overall supply of housing. The government has already set out the most ambitious vision for housing in a generation and doubled the housing budget. Since the launch of the pilots nearly 800 applications have been submitted by tenants who want to take their first steps towards owning their own home. The first purchases are now beginning to be made. Housing and Planning Minister, Gavin Barwell, said: “Anyone who works hard and aspires to own their home should have that opportunity to do so. Right to Buy will help lots of people, like Sasha and Peter, go from being a tenant to homeowner.” The minister visited the family in Croydon to hear first-hand their experience of becoming a homeowner. Sasha who works as a business support officer at Croydon Council has lived in her home for 19 years with partner Peter and their children Jordan and Caleb. New homeowner Sasha Dudley said: “We are very excited to be homeowners. We’ve lived here for almost 20 years, close to family and friends - but now overnight home suddenly feels more important to us.” Partner Peter Taylor added: “It’s always felt like a home but knowing that we now own the place gives that sense of security and ownership that wasn’t there before.” Housing associations have an excellent record of building new homes and have delivered the majority of the 293,000 affordable homes built since 2010. More than 309,000 households have now been helped into home ownership through government backed schemes since 2010. That is 141 new homeowners a day and around 4,350 a month. This includes many through the Right to Buy. On top of this Britain is building again with more than 900,000 additional homes delivered. The pilot associations and areas covered are:

Wealth & Finance | September 2016

Nuxeo Announces $20 Million Investment from Goldman Sachs Nuxeo, developer of a leading Enterprise Content Management (ECM) platform which enables organizations to manage complex digital content at massive scale, in early September announced that Goldman Sachs has made a $20 million investment in the company. This adds to the $10 million commitment by Kennet Partners announced in June, for a total of $30 million.

Some of the investment will be used to fuel the continued development of Nuxeo’s market leading content and digital asset management platform and expand sales and marketing capacity throughout North America, Europe and Asia.

Nuxeo has already demonstrated a significant technology lead, with cloudscale performance, a native NoSQL persistence engine and advanced analytics. With this investment the company will further these advancements with more NoSQL back ends, connectors for additional Big Data analytics solutions and Machine Learning engines and enhanced mobile and cloud connectivity. This increased investment will also enable Nuxeo to rapidly invest in its sales and customer service capacity in North America while building a greater business presence in Northern Europe and Japan.

“Today’s enterprises face increasing content and digital asset management challenges, especially when it comes to the increasing complexity, volume and diversity of digital content and its delivery channels,” said Eric Barroca, CEO, Nuxeo.

Christian Resch at Goldman Sachs Private Capital, will join the Nuxeo board. “With its growing complexity enterprises find it increasingly challenging to effectively use and manage digital assets,” said Christian Resch. “With this new investment, Nuxeo is strategically positioned to capitalise on this opportunity by accelerating innovation and further building its impressive roster of customers across a large and diverse set of markets.”

“At Nuxeo, we’re delivering consistent innovation to address these challenges with the flexible, high-performance platform today’s enterprises need to manage growing volumes of complex digital content. With this additional investment from Goldman Sachs we will further accelerate our technical leadership while fortifying our global sales, support and marketing operations to capitalise on this significant market opportunity.

NEWS

EBRD Supports Poland’s Arctic Paper with €30 Million Loan The European Bank for Reconstruction and Development (EBRD) is providing the Polish paper producer Arctic Paper S.A. with a €30 million loan to finance investments for improvements in the company’s operational and energy efficiency as well as to expand future production capacity in Poland.

Strengthening the resilience of the economy in the countries where it invests is one of the EBRD’s strategic priorities and the loan to Arctic Paper will benefit a strong local producer who is also competing successfully on international markets.

its first investment. To date, the EBRD has invested €8.13 billion in more than 370 projects in the country. The Bank’s activities include all sectors of the economy. In recent years, following demand in the market, the EBRD has been particularly active in the development of the local capital market and in supporting energy efficiency and sustainable sources of energy.

The EBRD loan will be part of a €90 million financing package involving commercial banks and bond investors. With the planned investments Arctic Paper is seeking to significantly increase its competitiveness, expand its capacity and improve its energy and resource efficiency. The company’s mill at Kostrzyn, Poland, will be upgraded with investments under the EBRD’s Green Economy Transition (GET) approach to improve energy and waste efficiency.

The EBRD’s strategic plan for the period 2016-18 has three priorities: strengthening economic resilience, addressing global challenges and supporting regional integration. Web Address: www.ebrd.com

Arctic Paper Group is a leading European producer of paper for books and offers a broad range of products. Currently, the firm operates one paper mill in Poland and two in Sweden, with combined annual production capacity of 705,000 tonnes. In addition, the company owns a controlling stake in Rottneros AB, a Swedish pulp production company operating two pulp mills with a yearly capacity of 400,000 tonnes. In 2015, Arctic Paper generated consolidated sales of PLN 2,900 million and employs a workforce of approximately 1,770. Frederic Lucenet, EBRD director of manufacturing and services, said: “The EBRD is proud to support Arctic Paper and the successful further development of the company with the financial package we have put together with our partners. It will allow the firm to continue its successful path of development and growth. At the same time, the energy efficiency improvements will benefit operations and the environment.” Per Skoglund, acting CEO of Arctic Paper S.A., commented: “We are very pleased to finalise the refinancing process with strong and reliable partners. Aside from increasing our competitiveness, the refinancing will also enable us to improve our energy and resource efficiency, among other measures, thanks to the investments in energy and waste efficiency planned for our mill in Kostrzyn. Combined with further investments we have planned in new products; the refinancing will give us an increased advantage in today’s challenging paper market.” The EBRD and Poland have been working together closely since the establishment of the Bank 25 years ago and it was here that the Bank made

Wealth & Finance | September 2016

WMA Selects MSCI for Private Investor Index Series The Wealth Management Association (WMA1) on 1st September announced an agreement with MSCI to provide the Private Investor Index Series. MSCI will offer the wealth management community a series of flexible multi-asset class indices that will be augmented and enhanced over time based on the changing needs of the private client sector.

his change is the culmination of a lengthy project initially undertaken by the WMA private indices committee in which it considered those requirements and augmentations deemed necessary to ensure the Private Investor Index Series remain credible, useful and relevant to the Wealth Management community. Furthermore, the committee debated what flexibility in an index provider is necessary so that these enhancements can be delivered when required. Having considered these findings and the long-terms needs of the Private Investor Index Series the WMA board has decided to appoint MSCI as the exclusive index provider for these indices.

With agreement from the WMA Board the use of the new index series will begin on 1st March 2017. Maintaining the transparency of the Private Investor Index Series will remain a priority for both sides and the data collection for the indices from within the WMA membership will remain in WMA hands and continue to be 100% confidential and reported anonymously. WMA chief executive, Liz Field comments: “It is essential that as a trade association we constantly review the ongoing relevance and use of our suite of indices for our member firms. As demands change we need to be able to evolve with them and the flexibility offered by MSCI allow us to do that.” Diana Tidd, managing director and global head of index products at MSCI added: “We are proud that the WMA has chosen MSCI as the provider for this index series. We are dedicated to supporting the wealth management community, and delivering top quality indexes. MSCI’s long history as a leading global index provider and our desire to work closely with our valued clients, gives us the experience and ability to be nimble and to flexibly adapt to evolving markets and client needs.”

This new agreement will ensure the delivery of a suite comprising of five indices: conservative, balanced, income, growth and global growth. Further consultation with the WMA membership and Private Investor Indices Committee will take place and inform the ongoing development and refinement of the traditional indices, in addition to exploring with MSCI options for additional new indices.

Web Address: www.thewma.co.uk

WEALTH MANAGEMENT

The Scarcity of Income Income is becoming ever scarcer in a world dominated by interventionist central bank policy and sliding growth rates. Fixed income yields have been suppressed by quantitative easing, with a significant portion of the universe now offering negative yields, while rock bottom interest rates mean cash yields next to nothing.

Consumer Discretionary “The largest shift in overall sector weight following the annual review has been in consumer discretionary, with the yield screening criteria and reweighting to fundamental value, both core parts of the Dividend Stream methodology, leading to the addition of new constituents. Overall the exposure to this sector rose from 10.5% to 20.5% when it rebalanced. This represents an interesting exposure given recent trends post-Brexit and is now the second largest sector weight.”

he historic Brexit vote has exacerbated the situation, with yields on safe haven government debt plunging to record lows in the UK, and curtailing any rise for interest rates.

Equities offer an ever-popular alternative. The Index behind the WisdomTree UK Equity Income UCITS ETF (WUKD) has recently rebalanced its holdings, reducing weights where positions have outperformed, and adding to existing positons now being flagged by the investment methodology as being relatively undervalued.

Utilities “Following the June rebalance and with the removal of a number of utility stocks the weight of the sector has fallen by close to 4% from 15% to 11% leaving it as the fourth largest sector in the index. There has also been an impact from lowering the weight of utility stocks that had outperformed on a relative basis”

The Index screens for the top 33% of UK-domiciled companies by dividend yield, and then weights by cash dividends paid out over the last 12 months, otherwise known as the Dividend Stream, a unique WisdomTree methodology. WisdomTree believes that focusing on consistent dividend payers delivers better returns for investors over the long term. The WisdomTree UK Equity Income UCITS ETF reviews its holdings annually, with a number of companies seeing significant increases to their weightings at the most recent review at the end of May. The review mechanism focuses on both introducing new dividend paying companies and reweighting to fundamental value based on cash dividends.

Consumer Staples “The largest reduction in sector weight has been within consumer staples where overextended valuations, especially in tobacco companies, triggered a reduction in weight. From a cyclical perspective this reflects the fact that investors have sought out these typically defensive stocks to the point where the value argument no longer fits into the high yield criteria used within the selection process.”

The Index has added exposure to a number of companies with a history of delivering above average dividend yields. Currently, the Index comprises 96 constituents and represents a broad approach to accessing income in a low interest rate environment. Below, WisdomTree’s head of research, Viktor Nossek, focuses on some of the key sectors within the index that the ETF tracks.

A balanced exposure to UK income stocks “Overall the WisdomTree UK Equity Income UCITS ETF has a balanced exposure to high yielding UK equities. By rewarding companies based on cash dividends paid, this creates a basket of UK dividend heavyweights covering various market-cap sizes. In fact, with large cap stocks representing 57% of the index, a 32% allocation to mid-cap stocks, and remainder in small-caps, it is clear that the investment methodology does not discriminate against the mid to small-cap segment of the market, enhancing the diversification argument. From a valuation perspective, the addition of new constituents and the reweighting to fundamental values resulted in a higher dividend yield. The index currently has a historic 12-month yield of 5.3% as of the end of June.”

Financials “As part of the June rebalance the weighting in financials increased from 22% to 25%, which represents the maximum weight that any sector can have in the index. This is an excellent example of managing sector exposure through our capping methodology. The main cuts to dividends within the banking stocks have taken place and more importantly our focus on financials is broad based covering mainly insurance and asset management companies. In fact, there is only one banking stock in our index and this is broadly diversified on an international basis.”

Wealth & Finance | September 2016

WEALTH PRESERVATION

WMA Fintech Conference 2016: Evolution, Not Revolution? The Wealth Management Association (WMA) hosted its inaugural Fintech conference at KPMG’s headquarters at Canary Wharf. In attendance were delegates from a range of wealth management firms, as well as experts on the latest technology innovations such as blockchain and robo-advice. The WMA is the leading industry body for the private client investment community, representing members who manage in excess of £734 billion of UK wealth.

The topic of robo advisors was discussed on a panel which consisted of Pete Connell, managing director of Wealth Wizard, Dr Joseph Hine, strategic adviser of Crealogix and Giovanni Dapra, Co-founder & chief executive of Moneyfarm.

he event commenced with an overview of the impact of Fintech so far, delivered by global co-head of Fintech at KMPG, Warren Mead. He explained how wealth managers and other financial institutions are now competing against the likes of Apple, Amazon and Alibaba, rather than just their traditional rival companies.

Pete Connell, managing director of Wealth Wizard, comments: “Robo advice comes down to choice. Choice as a consumer, as a wealth manager and additional choice of players who are entering the market. Wealth Managers have three options: they can create, buy or rent Fintech technology. Buying Fintech companies to incorporate technology is popular, but wealth managers have be careful they do not quash the culture of innovation.”

Warren Mead, global co-lead at Fintech, KPMG says: “Wealth Managers need to reassess who their competitors are – Silicon Valley is coming for them. Some tech companies want to collaborate with established firms but others want to steal their lunch. “In the long term, the industry needs to make itself more relevant to people’s everyday lives. Looking a decade ahead there’s a real risk that traditional financial services could be completely invisible to consumers. Take Apple Pay, for instance: many people associate it with Apple and totally forget about the bank that sits in the middle.”

Dr Joseph Hine, strategic adviser of Crealogix, comments: “Innovation from within, as a business model is a challenge; as it is not common for innovators to understand the day to day reality and legal frame work of financial services and vice-versa.”

“Wealth Managers need to reassess who their competitors are – Silicon Valley is coming for them.”

For the conference the WMA also hosted five Fintech companies – Delio Wealth, Novastone, BondIT, Robur and StockViews – who won competition held by WMA to showcase digital innovations and discuss the role these companies are playing in shaping the wealth management industry. WMA chief executive, Liz Field comments: “Technology is one of the biggest things keeping wealth managers up at night, so it was important to dedicate a day to Fintech to shed light on the digital innovations which are changing the sector. We had a host of esteemed speakers who talked us through the impact of digital evolution for our sector and it is clear this will be an important ongoing debate.”

Alderman Professor, Michael Mainelli, FCCA FCSI FBCS, executive chairman & renowned independent expert on Blockchain, discussed the impact of mutual distributed ledgers on the wealth management industry in general and on securities in particular. Michael Mainelli commented: “Blockchain is over twenty years old, but it has risen to prominence in financial services due to BitCoin. A lot of people in finance like to think they are ahead when it comes to technology, but the reality is that they are behind. The benefits of a blockchain ledger is that it is unable to be changed, and that it is mutually owned. Blockchain is not a silver bullet: it will not save industries that are struggling to adapt to technology. The industry needs to have the willpower to change.”

Web Address: www.thewma.co.uk

Wealth & Finance | September 2016

WEALTH PRESERVATION

Wealth-X and NFP Unveil Second Family Wealth Transfer Report According to a September report on wealth transfers released by Wealth-X and NFP, ultra-high net worth (UHNW) individuals across the globe will transfer more than $3.9 trillion between generations over the next decade — enough to purchase the 10 largest companies in the world outright.

reparing for Tomorrow: A Report on Family Wealth Transfers’ takes an in-depth look at the most pertinent issues and challenges UHNW individuals face when transferring wealth to the next generation. The report, which was produced by Wealth-X and sponsored by NFP, includes insight and best practices for family wealth transfers and the associated assets of the ultra-wealthy.

From these findings, the report highlights best practices for UHNW individuals, including: • The importance of early planning to set expectations for all stakeholders in the family and prevent unforeseen circumstances; • Preservation of wealth through diversification, primarily against political instability or concentrated financial assets, such as primary businesses, to limit exposure to unexpected events; • Usage of a full suite of expert advisors who work collaboratively to help manage an increasingly complicated global landscape.

Key findings from the Wealth-X and NFP report include: • More than 14,000 UHNW individuals are likely to transfer assets in the next 10 years; • These UHNW individuals have an average personal wealth of $272 million; • This total combined wealth ($3.9 trillion) represents 13% of all UHNW assets globally; • The United States will experience the most wealth transfers globally in the next 10 years; • Private investments represent the largest holdings for UHNW individuals set to transfer their wealth in the next decade, accounting for 36% of their net worth, an average of nearly US$100 million per person; • This same group has an average liquidity of $92 million and $16 million in real estate and luxury assets.

“As UHNW individuals age, they increasingly consider their legacy, whether that is maintaining it, if they are second or third generation wealthy, or creating it, if they are first generation.” ‘Preparing for Tomorrow: A Report on Family Wealth Transfers’ leverages Wealth-X’s proprietary database of the world’s most robust collection of curated research and intelligence on UHNW individuals, defined as those with a net worth of US$30 million and above.

“As UHNW individuals age, they increasingly consider their legacy, whether that is maintaining it, if they are second or third generation wealthy, or creating it, if they are first generation,” said Tomas Povedano, chief operating officer, NFP Life Solutions. “The importance of early planning and education of all related family members cannot be overstated; we find that setting expectations prudently can create the long-term legacy and stability that is so important to many UHNW individuals.”

Wealth-X’s team of researchers and analysts spoke to a panel of experts to understand the issues and created the Wealth-X UHNW Family Wealth Transfer Model to identify when these UHNW individuals are likely to pass on their wealth to the next generation, how much of this wealth will be inherited and how it will be passed on. The UHNW Family Wealth Transfer Model incorporates factors such as current and future wealth growth, taxes, and money passed onto spouses who will not transfer it to the next generation in the next 10 years.

‘Preparing for Tomorrow: A Report on Family Wealth Transfers’ outlines many of the significant difficulties UHNW individuals face when planning for wealth transfer, from family disputes to global reporting requirements.

For more information, visit wealthx.com and NFP.com

Wealth & Finance | September 2016

ASSET MANAGEMENT

Alternative Asset Managers and Investors Deepen Partnership Through Greater Alignment of Interest Alternative asset managers are changing their business models and exploring a broader set of arrangements designed to improve the alignment of interest between themselves and their investors, according to a new survey by the Alternative Investment Management Association (AIMA), the global representative for alternative asset managers.

• Around half of managers (48%) offer or are considering offering co-investment to their investors, via either a particular investment opportunity or jointly-managed fund; • Disclosure of data has increased substantially since the financial crisis, and investors are given greater access to portfolio managers.

he study, titled ‘In Concert’, is the most extensive undertaken by AIMA into the design of manager remuneration, investment terms and other methods of deepening the relationship with investors. AIMA CEO Jack Inglis said: “Managers want to build sustainable businesses and investors want the right kind of performance at a fair price. These are the interests that are being ever more closely aligned.”

AIMA CEO Jack Inglis added: “Hedge funds and other categories of alternative investment funds have, for decades, offered close alignment of interest with their investors. Performance fees charged only above a high watermark and ‘skin-in-the-game’ are decades-old concepts and have helped hedge funds in particular to raise capital from institutional investors. But what our survey shows is that managers now have a much larger array of tools at their disposal and are able to create ever closer and more tailored alignment. This trend helps to explain why, with only isolated exceptions, pensions and other investors have remained loyal to hedge funds in recent years.”

The report identifies emerging trends, such as the growing prevalence of “claw backs”, whereby a share of past performance fees are returned to investors during loss-making periods, as well as quantifying longer established practices including “skin in the game”, with managers investing their own personal capital alongside their investors’. The study finds that these and other beneficial terms often can be obtained by investors in return for agreeing to lock up their capital for longer.

The survey of 120 alternative investment fund management firms has been sponsored by RSM, a provider of audit, tax and consulting services focused on the middle market.

Among the findings: • One-in-three managers now charge performance fees above a hurdle rate, such as a fixed percentage or an index-based benchmark; • Three-quarters (77%) of managers offer or are considering offering a sliding fee scale, whereby management fees are reduced as the fund raises assets above particular thresholds; • Almost all (97%) managers charge performance fees only above a high watermark – the fund’s highest previous value; • Although not widespread, more fund managers are offering claw backs, whereby a share of past performance fees are returned to investors during loss-making periods; • Longer lock-ups in exchange for lower fees and other beneficial terms are increasingly common; • The majority of managers now agree to calculate and charge performance fees annually, rather than throughout the year, such as when profitable positions are closed out; • In firms where staff invest their own capital in the fund, nearly 30% said that principals and employees were the source of more than 10% of the fund’s total assets under management; • Nearly two-thirds (61%) of managers consider that having a significant personal investment in the fund is the single most important method for aligning interest with their investors;

“Institutional investor demands have brought about significant changes that affect the overall industry,” said Alan Alzfan, hedge fund practice leader with RSM US LLP. “In a highly competitive environment for the asset management industry, this survey provides keen insight on how hedge fund managers continue to take the lead in finding solutions that drive growth and innovation and add value to their investors.” The survey was overseen by AIMA’s Research Committee, which comprises executives at fund managers and service providers, and was reviewed by the AIMA Investor Steering Committee, whose members represent pension fund managers, endowments, foundations, large family offices and sovereign wealth funds. The findings build on ‘The Extra Mile’, a 2014 paper by AIMA and Barclays into the growing prevalence of partnerships between alternative investment funds and institutional investors. For further information, please visit AIMA’s website, www.aima.org

Wealth & Finance | September 2016

ASSET MANAGEMENT

A Multi Asset View by Barings - Aim Higher Marino Valensise, head of the multi asset & income at Barings explains his current investment strategy and some of the thinking behind it, particularly why investors who aspire for higher returns for their asset allocation portfolio need to depart from a static, simple asset allocation strategy of 60% stocks and 40% bonds.

T -

Nevertheless, this period was also characterised by globalisation, improving corporate earnings, margins growth, expanding valuation multiples and declining inflation. It was also during this period that access to financial assets was ‘democratised’ through the creation of exchange traded funds (ETFs). A great cocktail of positive factors for market returns.

he key insights include: - The output of Barings’ detailed analysis confirms that the 60/40 portfolio is forecasted to deliver a much poorer return than previously. It should not come as a surprise if, for the next 10 years, this strategy delivers an annual return no higher than 2% with a volatility of around 10%. - Investors who aspire for higher returns for their asset allocation portfolio will need to depart from a static 60/40 strategy based on the beta of these two asset classes. Style investing and theme investing must become part of our standard toolbox. In relation to themes, Barings has recently increased its exposure via thematic equity baskets: European REITs, Lithium Battery Technology companies and Japanese Banks. The focus should also be on strategies that are able to keep portfolio volatility under control while allowing us to participate in equity-like returns. High yield bonds have such characteristics. Another way to reach this goal is through investing in a ‘min vol’ equity strategy, which keeps equity volatility under control. Investors should carefully consider the use of currencies: these can offer good return opportunities, but also a formidable and low cost way of diversifying a portfolio and building hedges.

The 60/40 portfolio At that time, relying on a simple asset allocation strategy of 60% stocks and 40% bonds (the so-called ‘60/40’ portfolio) would have been the right thing to do, considering how markets behaved over the following years. It is amazing to observe how such a naïve strategy was able to generate around a 9% return, deliver a tolerable volatility experience and, hence, offer a great risk-adjusted outcome. Moreover, such a return more than protected one’s capital from inflation of just 2.6%. If only we had known! Even more recent results have been good for the 60/40 strategy, courtesy of central banks’ policies.

“Paraphrasing the old statement by Chuck Prince from Citibank, the music is still playing for the 60/40 strategy as it continues to deliver good returns.”

After graduating in November 1987, I spent some months struggling to find a job. It was much slower than I expected, due to the poor market conditions caused by the stock market crash in the autumn of that year. Then, finally a job offer. On a quiet day in June 1988, I started my career in the financial services industry in London. Not only was this a great day for me, but also a perfect time for any investor with capital to invest in stocks and bonds.

In the period subsequent to the Global Financial Crisis of 2008, these policies have artificially suppressed bond yields to the benefit of bond prices, and have boosted equity valuations by lowering the discount rate applied to the stream of future earnings. Long live asset inflation!

The S&P 500, after an extremely volatile winter, was trading at an index level of 265, which represented an acceptable trailing price/earnings (P/E) ratio of 15x. The yield on the 10 year US Treasury Note was around 9%, on a declining path since the Fed had won the battle against inflation a few years earlier.

The music will stop As always, however, past experience is not necessarily a good indication of the future. Paraphrasing the old statement by Chuck Prince from Citibank, the music is still playing for the 60/40 strategy as it continues to deliver good returns. Although, we may soon discover that the DJ has left the room and all has gone quiet. The bottom line is that we believe the future will differ greatly from the past.

During the subsequent 30 years, investors experienced numerous challenges including severe recession in 1991, the Asian Crisis in 1997, the technology bubble in 2000, the corporate governance fiasco in 2001/2002, the Lehman Brothers’ bankruptcy in 2008 and, more recently, Greece’s economic crisis and Brexit.

Wealth & Finance | September 2016

ASSET MANAGEMENT

egy based on the beta of these two asset classes. This will also be necessary to keep portfolio volatility under control, at a time where the diversification benefits of bonds might disappear. Going beyond static betas means complementing them with a sizeable exposure to other sources of return. Perhaps these would also offer the benefit of being uncorrelated to equity and government bond directional movements.

Our first reason relates to equity valuation and profitability. A higher entry valuation usually leads to lower investment returns and vice-versa. Currently, the US equity market is fully valued, trading at a trailing P/E of 20x. This valuation has been rising as a consequence of a very benign inflation outlook, a favourable monetary policy, and a globalised trade environment. In the future, these factors might form a drag on valuations rather than a tailwind. On profitability, we note that profit margins are high, propelled by low taxes, low interest charges and low labour costs. A future deterioration of these drivers might have a negative impact on corporate profitability.

Investors should have a more dynamic approach to asset allocation, and focus on timing asset class entry and exit. This is about capturing generous risk premia when available, and avoiding investments where the risk premium is too thin.

Secondly, bond market valuations are expensive, perhaps even more so than equities, because of financial repression. With a starting yield of only 1.6%, the 10 year US Treasury Note will not be able to deliver returns comparable with the past. Investors should not expect much from this asset class.

Secondly, allocation to equities must be actively managed beyond the traditional dimensions of geography and sectors. Style investing and theme investing must become part of our standard toolbox. In relation to styles, we look at two specific styles with interest: ‘income’ and ‘value’. In relation to themes, we have recently increased our exposure via thematic equity baskets: European REITs, Lithium Battery Technology companies and Japanese Banks.

Thirdly, a higher volatility regime may be on the cards. Central bank policies have helped compress volatility across all asset markets. We know that volatility – in the long run – tends to revert to the mean. We are also aware that loose monetary policies are becoming increasingly less effective. Hence, we might well experience a shift to a higher volatility regime in all assets. Certain measures of forward-looking volatility are confirming that market participants are already focusing on this.

Thirdly, the alpha generation aspect of equity investing must be addressed. Active strategies, as a way to try and outperform a prospective beta return, should be implemented. I would also add that the focus should be on strategies that are able to keep portfolio volatility under control while allowing us to participate in equity-like returns. High yield bonds have such characteristics. Another way to reach this goal is through investing in a ‘min vol’ equity strategy, which keeps equity volatility under control.

Finally, a higher correlation between equities and bonds is here to stay. During the last major crises, the return correlation between equities and bonds turned negative. This had a beneficial effect on the 60/40 portfolio, as bonds acted as a partial hedge to the losses generated by the equity position. When we consider the extremely low starting yield, and the possibility that the next big crisis could be a sovereign debt crisis, the role of government bonds as diversifiers must be called into question. We also note how cross-asset correlations have been increasing over the past few years.

Finally, investors should carefully consider the use of currencies. These can offer good return opportunities, but also be a formidable and low cost way of diversifying a portfolio and building hedges. Market developments through the previous decades have allowed asset allocators to build long-term naïve portfolios, and spend their subsequent years on the beach. What comes next will require more focus and dedication. It feels as if the ‘normal’ returns, which the markets would have otherwise produced in the future, have been brought forward to the extent that little is left. Only fund managers with skill and creativity will be able to deliver.

Let’s get real At Barings we engage in strategic asset class forecasting. The output of our detailed analysis confirms that the 60/40 portfolio is forecasted to deliver a much poorer return than previously. It should not come as a surprise if, for the next 10 years, this strategy delivers an annual return no higher than 2% with a volatility of around 10%. The combination would be a low and disappointing 0.2 information ratio. Such a conclusion would first of all suggest that investors’ expectations for mixed-asset strategies’ returns are too ambitious. These expectations must come down. For example, let’s look at defined benefit pension schemes in the US. The expectation for a much lower return for the 60/40 should be matched by a shift in a plan’s expected future returns. While it is true that these institutions have the ability to be more active than a static 60/40 strategy, history shows that their long-term returns tend to be very similar to it. We must conclude that the average 7.6% annual return assumption (as calculated by NASRA) is not a realistic assessment of what will come next. Aim higher In this environment, investors must explore ways to achieve higher returns. The question is how. Investors who aspire for higher returns for their asset allocation portfolio will need to depart from a static 60/40 strat-

Company: Baring Asset Management, London Name: Marino Valensise Web Address: www.barings.com

Wealth & Finance | September 2016

Investor Demand for EM Debt Set to Rise on Diversification Benefits and Attractive Valuations, Survey Shows Diversification benefits and attractive valuations are the two main reasons cited by institutional investors for an anticipated rise in exposure to emerging market debt, according to a survey by NN Investment Partners (1).

Factors that will make EM debt even more attractive include a further break-up of the Europe Union (41%); Brexit (25%); a Federal Reserve rate rise (25%); a rise in US inflation (19%); and a rise in Eurozone inflation (15%). Investors’ greatest concerns about the asset class however include political uncertainty (43%); credit quality (42%); liquidity (27%); a China slowdown (23%); an increase in defaults (20%); rising interest rates (17%); rising inflation (17%); and a shortage of bonds (6%).

ore than half (54%) of respondents in the survey expect institutional investors to raise their exposure to the asset class over the next three years. Only 7% of respondents expect a decline. Three in five (60%) of those who believe there will be an increase say it is because of the diversification benefits of EMD and 56% say it is because valuations are significantly more attractive versus other types of bonds and justify the extra risk. Two in five (40%) say EM debt provides better risk-adjusted exposure in an environment of low economic growth.

Marco Ruijer added: “The bond yields available in EMs are clearly attractive to investors, who have been heavily focused on seeking income for some time. As the global economy continues to improve, investors will invest more in the asset class as they gain ever more confidence in the creditworthiness of EM debt and see it as a great way to diversify away from developed markets. Nearly half (46%) of our respondents expect fundamental credit conditions to improve in EMs over the next two to three years versus 24% who expect a deterioration.”

The investors’ views tally with NN Investment Partners’ outlook on emerging market debt. Marco Ruijer, lead portfolio manager in the EMD Hard Currency team within the EMD Boutique of NN Investment Partners, commented: “The current favourable global liquidity backdrop underpinned by unprecedented central bank monetary policy leads us to believe that allocations towards EM debt will continue; driven by the attractive valuations, improving EM fundamentals and diversification benefits.”

“However, our research shows investors do have some reservations about EM debt generally, with the majority (60%) saying it is risky to take a broad passive approach rather than adopting active asset allocation to stock-pick the best opportunities and control the risks elsewhere.”

In terms of diversification, the biggest benefit of EMD is ‘geographic’, which was cited by 52%. Other benefits mentioned include enhanced income generation (48%); improved credit risk exposure (46%); improved credit sector exposure (20%) and duration (14%).

On average, investors believe that 6% of a portfolio should be invested in EM debt and more than one in seven (15%) believe exposure should be over 10%. The issuance of EM debt is expected to rise over the next three years, with 56% saying this. Only 8% anticipate a fall.

“The current favourable global liquidity backdrop underpinned by unprecedented central bank monetary policy leads us to believe that allocations towards EM debt will continue.”

(1) The findings revealed in NN Investment Partners’ own research carried out in a survey by Citigate Dewe Rogerson amongst 86 international institutional investors in July and August 2016.

Wealth & Finance | September 2016

ASSET MANAGEMENT

Asset Manager Revenue and Operating Margins Recover Solidly in Second Quarter DST kasina LLC, a provider of business intelligence that transforms distribution, marketing, and product development for asset managers, released the results of its Asset Manager Composite for the second quarter of 2016.

or the 16 asset management firms that comprise the DST kasina Asset Manager Composite, almost all pertinent metrics improved sequentially from calendar Q1 2016, while it was a more mixed picture on a year-over-year basis (compared to calendar Q2 2015). Lawrence Petrone, director of product research & consulting at DST kasina, stated: â&#x20AC;&#x153;We were very pleased with the year-over-year recovery in the Composite group margins towards the trend line despite revenues being nearly 8% lower relative to calendar 2Q 2015. The sequential improvement in operating and net margins was also commendable.â&#x20AC;?

Despite the sequential improvement, the year-over-year results for the composite group did not achieve the record levels achieved in 2Q 2015. Revenues of $10.3 billion in 2Q 2016 declined 3.8% from the year-ago peak level of $11.2 billion. The most recent quarterâ&#x20AC;&#x2122;s operating margin of 32.7% was 220 basis points below the peak operating margin of 34.9% achieved last year, on a weighted basis. However, on a trend-line basis, as depicted in the margins chart, operating margins recovered nicely. The bias is still suggesting a gradual upward trend. AUM and asset flows: A more nuanced picture Overall assets under management for the DST kasina Asset Manager Composite rose sequentially for the fourth consecutive quarter. At the $10.214 trillion level, overall assets were just shy of the $10.234 trillion peak reached in 1Q 2015. The sequential decline in assets seen in six of the 16 asset managers was due to a variety of company-specific factors, not merely a function of firm size.

Operating results: Solid execution Composite results for calendar 2Q 2016 recovered strongly from calendar 1Q 2016. Revenues, which are largely comprised of asset management fees, rose 3.8% sequentially. Operating margins for the 16 asset management firms that comprise the DST kasina Asset Manager Composite recovered by 240 basis points to 32.7% on a weighted basis. On a simple average basis, the Composite improved modestly by 140 basis points to 29.7%. Sequential improvement in operating and net margins was driven by top-line growth and a continued focus on expense management.

Net change in assets was largely impacted by market appreciation, net inflows, and foreign currency impact. Currency exchange rates provided a positive impact on calendar 2Q 2016 cash flows, they were a headwind in 1Q 2016. As seen in the flow breakout of the quarterly changes in assets 15 of the 16 asset managers provide, one of the more interesting underlying trends last quarter was continued evidence of outflows from actively-managed products to passively-managed investment vehicles.

There was sequential improvement in revenues and margins in 13 of the 16 asset management firms. The asset management firms that experienced a sequential revenue decline were, not surprisingly, the same firms that saw operating and net margins decline.

Wealth & Finance | September 2016

Quod Financial Launches FX Solution for Regional Banks and Asset Managers Quod Financial, a leading provider of adaptive trading technology, announced the launch of a foreign exchange trading and liquidity management platform serving regional banks and asset managers.

uod Financial’s Adaptive FX (AFX) Trading Platform leverages MarketFactory’s low-latency aggregation and connectivity to 70+ currency markets. AFX provides all of the tools essential for navigating the complex and highly fragmented FX world in a single solution.

For institutions providing custom pools of liquidity to clients, the solution provides real-time algorithmic pricing and internal liquidity management. In addition, system wide data can be collected and reused for Quod’s new generation of artificial intelligence trading algorithms. Darren Jer, COO of MarketFactory commented, “We’re excited to power Quod Financial’s full-stack eFX solution to better serve customers with diverse needs. Quod’s product is the result of years of R&D from many asset classes and will empower trading desks with the most modern tools to capture greater pricing and execution profit.”

Regional banks and asset managers are in dire need of managing the rapid technology changes in FX trading. In an asset class where fees are expressed in the spread, the main objective is to manage spreads while still maintaining profitability. AFX meets a multitude of needs for different classes of users, providing benchmarks, transaction cost analysis, and best of class execution strategies to allow regional banks and asset managers to build and adapt trading strategies according to their specific workflows.

Ali Pichvai, CEO of Quod Financial said, “MarketFactory’s FX feed handlers contain years of venue-specific IP that ensures our algos always see the best market data. Their flexible model will allow our clients to add and subtract any liquidity provider in London, Tokyo and New York, speeding time-to-market.”

Wealth & Finance | September 2016

ASSET MANAGEMENT

2. Net sales of multi-asset funds fell to EUR 15.2 billion, from EUR 20.3 billion in Q1 2016. 3. Net sales of bond funds rebounded to EUR 7.3 billion, from net outflows of EUR 170 million in Q1 2016. 4. Net sales of real estate funds fell to EUR 3.3 billion, from EUR 8.0 billion in Q1 2016. 5. Net sales of other AIFs increased to EUR 22.5 billion, from EUR 11.5 billion in Q1 2016. • Total European investment fund net assets increased by 2.1% in Q2 2016 to EUR 13,290 billion.

he Highlights of the developments in Q2 2016 include: • Net sales of UCITS rebounded to EUR 71 billion, from net outflows of EUR 7 billion in Q1 2016. • Long-term UCITS, i.e. UCITS excluding money market funds, posted net inflows of EUR 44 billion, compared to net outflows of EUR 5 billion in Q1 2016.

1. Equity funds continued to record net outflows, i.e. EUR 18 billion compared to EUR 4 billion in Q1 2016. 2. Net sales of multi-asset funds increased to EUR 14 billion, from EUR 6 billion in Q1 2016. 3. Net sales of bond funds rebounded to EUR 42 billion, from net outflows of EUR 9 billion in Q1 2016. 4. Net sales of other UCITS increased to EUR 5 billion, from EUR 2 billion in Q1 2016. • UCITS money market funds experienced net inflows of EUR 28 billion, against net outflows of EUR 2 billion in Q1 2016. • AIF net sales increased to EUR 55 billion, from EUR 43 billion in Q1 2016. 1. Net sales of equity funds fell to EUR 3.7 billion, from EUR 6.7 billion in Q1 2016.

Net assets of UCITS went up by 1.7% to EUR 8,073 billion, and total net assets of AIFs increased by 2.8% to EUR 5,217 billion. Bernard Delbecque, senior director for economics and research at EFAMA commented: “Net sales of UCITS rebounded during the second quarter of 2016 thanks a signification increase in the demand for bond funds and money market funds, which can be partly explained by the low interest rate environment and renewed expectations of further falls in interest rates.” For more information about EFAMA, please visit www.efama.org

Wealth & Finance | September 2016

How Much Money Does It Take to Be Happy? So much for retail therapy, the TD Ameritrade Millennials and Money Survey showed saving and the financial security it may bring makes people happier than spending. Of course, it is easier for some to save than others.

or example, Millennials have more debt and student loans than Boomers. The survey of 2,100 U.S. adults identified Americans as either Savers or Spenders and found. • The minimum personal income to be happy is $58,000 for Boomers and $51,000 for Millennials; • Only a quarter of Millennials say spending money helps them enjoy life; • Savers are more likely than Spenders to be married, own homes and have higher incomes; • Savers marry Savers, which they say prevents arguments (59% Boomers, 57% Millennials);

• Millennials hold more non-mortgage debt ($15,000) than Boomers ($10,000); • Four in 10 (39%) millennials are paying off student loans by making median monthly payments of $200.

Savers – both Millennials and Boomers – find saving makes them happy (67%, 71%) and most (8 out of 10) equate it with security. “Our research shows that it is not so much having more money as it is saving money that can make people feel more financially secure and happy,” said Dara Luber, a retirement and long-term investing professional at TD Ameritrade. “The more money you have saved, the freer you are to take control of your own destiny and make choices to improve your quality of life.”

Please visit www.amtd.com for more information.

“Everyone needs to start somewhere, and a commitment to a regular long-term savings plan – no matter how small – is well worth the effort,” Luber said. “If your end goal seems daunting, break it down into smaller goals and celebrate milestones along the way. Use these small happy moments as motivation toward your big money goals like retirement.”

82% of millennials are saving for something other than retirement, such as vacation or an emergency fund while 80% of Boomers, who are nearing a time when they may no longer work, are saving primarily for retirement. • One in four millennials is saving for a down-payment on a home, almost one in five (18%) is saving for education and one in 10 for a wedding/civil ceremony; • Boomers are saving twice as much for retirement as millennials, with a median of $300 vs. $150 per month. Despite the fact that millennials are saving for other things, more than two-thirds (72%) have already started saving for retirement. “While we’re thrilled to learn the majority of Americans have positive savings habits, we can’t ignore the fact that a significant number of non-savers find long-term saving to be difficult, if not impossible,” Luber said. For instance: • Of those who are not saving, two-thirds (67%) of millennials and more than half (56%) of Boomers say they cannot afford to save; • More than a quarter (26%) of non-retired Boomers expect that they will never fully retire, along with 23% of millennials; • 14 % of millennial Spenders say they are Spenders because they have so much debt they do not care about saving anymore;

PRIVATE WEALTH & INVESTMENT

Buy-To-Let Surges in Post Brexit Bounce Buy-to-let activity surged 12.7% in August as the sector successfully absorbed the Government’s 2015 policy changes and enjoyed a post Brexit bounce, according to research from Connells Survey and Valuation.

hanges to the tax treatment of the buy-to-let sector looked to be choking off activity in 2015 and early 2016. Although the restriction of tax relief on mortgage finance costs to basic rate tax only, the removal of 10% ‘wear and tear’ allowance, and the introduction of additional 3% stamp duty surcharge hit the sector following the 2015 budget and the last Autumn statement, the August rebound suggests the Government’s changes are set to have been a short term problem for the sector.

The rebound in buy-to-let investment reflects developments in the wider economy where an immediate and detrimental impact on consumer confidence post Brexit has not materialised as predicted. The UK’s services sector saw a record rise in August with the purchasing managers’ index showing activity in UK services recorded the biggest month-on-month rise in the survey’s history. UK retail sales figures rose in July while consumer confidence rose in August. First-time buyer activity has seen the strongest overall increase in valuations and has driven August’s housing market, with valuations up by 6.8% on July and by 19.6% on an annual basis. Remortgaging activity has also seen an increase in valuations on both a monthly and an annual basis. On a monthly basis, remortgaging valuations saw a growth of 4.2% and a 1.5% increase year on year to August 2016. John Bagshaw continued: “First-time buyers have enjoyed a month of growth and the sector is continuing to thrive following a strong July – given first time buyers are the engine of the property market, this is very significant. August has also seen a surge in activity in the remortgaging sector, partially fueled by the interest rate.” Those further up the property ladder looking to sell their home felt an increase in activity by 2.6% compared to July. Across all sections of the housing market, overall valuation activity has risen by 5.1% on a monthly basis, between July and August. On an annual basis, there was also a slight increase of 0.2% more valuations carried out than in August 2015. John Bagshaw concluded: “Overall market activity remains steady and fears of a post-Brexit slump has failed to emerge. In the first full month after the Bank of England’s decision to cut interest rates, the buy-to-let market has seen a surge in activity. Powered by low interest rates, landlords have taken the opportunity to remortgage.”

John Bagshaw, corporate services director of Connells Survey & Valuation, commented: “Now the effects of the Government’s legislation have been digested by lenders and investors alike, buy-to-let activity has increased sharply. The market’s fears over the impact of Brexit are calming, too and the Bank of England’s decision to cut the base rate last month for the first time in seven years may also have a psychological impact on property investors. Encouraging economic data, high levels of employment and fading fears of a recession have also injected life into the sector. While we can still see the impact of last Government’s damaging set of changes to legislation in the year on year numbers, August’s surge in activity highlights the resilience of the buy-to-let sector.”

Web Address: www.connells.co.uk

Wealth & Finance | September 2016

Economic Developments Today in Russia European Corporate Top 100 - Russia

PRIVATE WEALTH & INVESTMENT 1609LB14

MDT Torg Ltd.is a specialised consulting and project finance provider in Russia. We focus on alternative energy, agriculture, food production and distribution. In 2010 we have supported, with our European partner company TJP (Best Corporate Finance Advisory 2015 – Austria), Austrian investors in one of the world’s largest solar power projects in the Ukraine.

oday we are amongst others developing 3 solar projects with 185 MW, 2 biodiesel plants with 140 000 tons and a starch wheat processing factory, total value €625 million.

Besides these large projects, we develop also a range of smaller projects in specialty food production and agriculture, with investments from about 1 million Euro and up. MDT was set up at the end of 2014, as a result of merging several companies, which have been active since the beginning the 1990#s in Ukraine, Hungary and Russia. The company specialises in infrastructure, agricultural and food production projects. Agriculture and food production in particular are booming because of the sanctions. This gives our investors much higher returns and values than similar projects in Europe.

“The company specialises in infrastructure, agricultural and food production projects.” MDT are working with Russian as well as European industry and private investors. We are especially working with private investors and family offices, who are now increasingly interested in participating in our projects, as they normally do not have any possibility to directly participate and profit from such economic developments today in Russia. According to the Prequin Infrastructure and Alternative Investor Outlook for 2016, 42% of investors that invest directly are looking to increase this type of exposure and none are looking to decrease their direct allocations. These tendencies we feel very much as interest and requests for investments are continuously increasing. Therefore, we also invest into the development of our firm’s staff, which are a group of specialists in project development, trade and finance, all with long standing experience in the Russian as well as international business. Company: MDT Torg Ltd. Name: Thomas L. Puskas Email: puskas@mdt-torg.ru Web Address: www.mdt-torg.ru Address: 105066 Moscow, ul. Dobroslobodskaya 16/3 Telephone: +79996754029

The challenges that lie ahead in 2016 for MDT concern finalising some of the financing pools for our projects. For the achievements of our work, we have recently been awarded the 2016 Distinguished Entrepreneur Award from the National Foundation for Business Development, which has been set up by order from President V. Putin in 2015.

Wealth & Finance | September 2016

PRIVATE WEALTH & INVESTMENT TI16105

Most Innovative Fintech Firm - UK & Best Money Management Platform: Moneyinfo

A Wealth of Information

Sammedia Limited, a private FinTech firm based in Henley in Arden, Warwickshire are changing the way we will access financial advice. Business Development Director, Sim Sangha tells us more.

businesses connect with their clients and delivers a more convenient, simpler experience. We are creating choice for consumers to choose how and when they are serviced and access advice when required. We want advice to be accessible to everyone when they need it to ensure they get better financial outcomes. Our product helps people make better decisions for repaying debt, saving for retirement, insuring their family and planning for life’s unexpected events.

ammedia are taking advice online. We help financial adviser firms deliver their services more efficiently through mobile technology enabling them to advise more people for less cost. Our aim is to solve the ‘advice gap’ that has been created by regulation where millions of people need access to financial advice but cannot afford it.

Our product moneyinfo, enables people to bring all of their finances together in one place. This includes their pensions, investments, savings, banking, credit cards, property, mortgages and insurances all stored in one place and organised alongside all the associated paperwork. Think of it like an electronic financial filing cabinet accessible on any device and whenever required.

Great technology makes your life easier by changing the way you access services; for examples just think of Amazon, Uber, Google etc. We are doing this for financial services by bringing all of your finances into one place, under a single login on any device. For more information about how you will access financial advice in the future, just search online for: moneyinfo

We work with advisers in financial advice, wealth management and the workplace bringing investments, savings and employee benefits together with a client’s personal finances. If you can organise all of your finances together then providing advice to you is far easier. What’s more some of this advice can be automated from your data, taking into account your personal situation. The term our industry uses for this is ‘robo-advice’ but with our technology, the robo bit is normally backed up by a human at the end of the phone for reassurance that any decisions you are making are right given your individual circumstances.

Company: Sammedia Limited Name: Oliver Jenkins (Marketing Manager) or Sim Sangha (Business Development Director) Email: oliver.jenkins@sammedia.com or sim.sangha@sammedia.com Web Address: http://www.sammedia.com/ Address: Forward House, Henley-in-Arden, Warwickshire, B95 5AA Telephone: 03303 600300

The financial advice industry is going through a transformation, particularly in terms of interacting digitally with end customers. It is one of the last industries to digitize and Sammedia is identified as one of the key fintech enablers in showing businesses how they can deliver large parts of their existing services via the web and on mobile devices. We not only help businesses meet their clients’ digital expectations, we also help reduce business overheads by removing costly processes and helping firms clean up their back office data so it can be accessed and updated in real-time on any device. We all like Apple, Amazon, Uber and contactless payments because they are convenient and make our lives easier. We don’t like automated queuing systems, having to remember multiple logins and passwords and lots of paperwork. Our client portal technology reinvents how FS

IR Stone / Shutterstock.com

Wealth & Finance | September 2016

PRIVATE WEALTH & INVESTMENT

First Port of Call

60-Second Interview

1st Port provides bespoke portfolio investments solutions using collective investments and some discrete equities. They manage portfolios on a global perspective and have the ability to manage investments within a diverse range of wrappers, as well as offering offshore solutions. With his colleague Melissa Longley, the firm can also provide services to US expats and Managed Portfolio Services (MPS) to intermediaries. Paul Stevens reveals more, including the firm’s highly personalised service to clients and their families, whom they find solutions for.

hat does your client base look like? Our clients include private individuals, their families, charities, corporates, and international clients.

What are your firm’s unique selling points? We are boutique manager and the two principals have over thirty years’ experience each in looking after clients. We provide a highly personalised service and make it our priority to get to know our clients and their families so that we can work together on finding solutions. What are the main challenges facing your company today? In an industry where size is considered a safe-harbour by clients, we find that as a boutique manager it can be harder to be selected. In reality there is no additional safety in size, indeed our clients’ assets are as secure with our custodians as they are anywhere else. What are the main objectives for your business in the future? We wish to continue to build upon our years of experience and grow our clients under management. In doing so we also aim to maintain our core philosophies of true diversification within investment portfolios, and high levels of service to our clients and their families.

Name: Paul Stevens Company: 1st Port Asset Management Email: paul.stevens@ 1stportassset.com Web: www.1stportasset.com Address: 180 Piccadilly, London W1J 9HF Telephone: 020 7917 9555

What individual in your industry and beyond do you admire the most and why? Her Majesty The Queen for an astounding level of service over seven decades whilst also maintaining absolute discretion at all times.

Wealth & Finance | September 2016

Asset Manager of the Year

Balancing the Books

Founded in 2006, Jadwa Investment is an investment management and advisory firm, rooted in Sharia principles. Jadwa started operations as a full service investment bank in 2007 and is regulated by the Capital Market Authority in Saudi Arabia.

ith headquarters in Riyadh and branches in Jeddah and Dammam, we specialise in the investment management and advisory businesses, while adhering to Islamic Sharia principles. We aim to set a new standard in Islamic investment management delivered by a focused and talented team of experts. The firm’s main goal is to consistently add value to our clients over the long term.

Despite the rapidly evolving economic context and precipitous market declines witnessed over the 2015-2016 period, we have continued to execute on our strategy, delivering outstanding performance for our clients, expanding the scope of our business activities, cementing our leadership position and setting ourselves apart from the rest of the industry. Ultimately, the most important driver is our focus on identifying client needs and delivering strong performance to our clients. This is rooted in our business principles, which emphasise the importance of aligning our own interests with those of our clients. In our closed end products like private equity and real estate, for example, we invest our own money as well as our clients’, so our clients’ success is truly our success also.

Over the years, we at Jadwa Investment have gained the trust of our clients across all asset classes we invest in by our consistent outperformance relative to the relevant benchmarks and competitors. We therefore have a very loyal client base that continues to grow steadily. As a firm, we continuously strive to cater to the needs of our clients in this ever-changing market environment through innovative products. Sharing unique investment opportunities with our clients has been one of our differentiation factors and a major reason for Jadwa to be an investor’s partner of choice. As a result, within 10 years of our start of operations we have grown our business to have over USD 6bn in assets under management and another USD 5bn in assets under advisory.

Over the years, we have put in place and perfected an extensive set of policies and procedures that guide our investment philosophy and process. This has led to consistent value creation for our clients. Our approach is driven by in-house research supplemented by a multitude of external sources. We have long term views that emanate from fundamental analysis. As fundamentals drive our investment ideas, we are comfortable acting on our convictions.

“Ultimately, the most important driver is our focus on identifying client needs and delivering strong performance to our clients.”

Since Jadwa’s inception, we have focused on areas where we can offer a differentiated and superior value proposition to our clients. This has led to two main business activities, mainly investment management and investment advisory. We always make sure to add value in our areas of expertise. Recently, we have deployed dedicated resources to expand our real estate business. Although the white land tax is creating headwinds for the sector, the government is taking various initiatives that are creating opportunities in certain real estate market segments. Although white land tax might put pressure on real estate prices, we believe it might also create opportunities for developers as land owners are more inclined to utilise raw land.

The firm’s track record is proof that we are able to perform well in both economic and market downturns as well as the upturns. Having survived and even strived during the 2008-2009 market downturn is a testament in itself especially that we were only a start-up at the time. We truly believe that it is the economic downturns which determine who is a leader in this industry. 2015 was again a very difficult year for the local market and Jadwa again proved itself as being a leader and pro-active in decision making, enabling it to preserve client capital. As a result Jadwa Saudi Equity Fund was the only broad market equity fund in Saudi Arabia that recorded a positive return while the Saudi market was down 15%. Since its inception in June 2007 the Fund has outperformed the benchmark by an average of 9.9% per annum and is the best performing Saudi equity fund over that period.

The government has commissioned a major expansion at the Grand Mosque in Makkah as well as the Holy Mosque in Madinah. This along with plans to increase the number of pilgrim visas, will result in a substantial increase in religious tourism over the coming years, and also benefit the hospitality segment in those regions.

Wealth & Finance | September 2016

PRIVATE WEALTH & INVESTMENT

In addition, the government has outlined plans to improve home ownership in the Kingdom as part of the recently announced National Transformation Program (NTP). We believe opportunities exist for developers that focus on the mid to low income housing segment - as demand outstrips supply. On the economic cities front, the government is focusing on economic cities, which will positively enhance the value of real estate within those cities. The government has relaxed some regulations which is likely to attract investors and tenants. Companies investing in the economic cities are allowed 100% foreign ownership and have a flexible grace period on lease payments. We believe the introduction of REITF, draft regulations for which CMA has already issued, will make income generating investment funds more attractive for fund managers, due to the ease of funding and exit mechanisms. Looking ahead to the future, the GCC economies are definitely facing some headwinds due to the low oil price environment. However, governments in the region are taking steps in the right direction by rationalising subsidies and prioritising spending in order to create sustainable economies. It is at times like these that the best investment opportunities arise. By being patient and disciplined, Jadwa is in a good position to take advantage of any opportunity it deems value accretive to its clients and in line with its long term investment strategy. Jadwa continues to expand further in the region and beyond in terms of both clients and products. The firm is leveraging both its expertise and client base within the region and beyond.

Gimas / Shutterstock.com

Company: Jadwa Investment Name: Zaheeruddin Khalid, CFA Email: zkhalid@jadwa.com Web Address: www.jadwa.com Address: Sky Towers King Fahad Road, Riyadh, Saudi Arabia Telephone: +966 11 271 1111

Wealth & Finance | September 2016

Unique Investment Opportunities

PRIVATE WEALTH & INVESTMENT 1609MS14

Prophet Equity is a private equity firm that uses proven, data-driven analytical techniques coupled with over 100 years of investment and management experience to invest in, unlock and realise future value today.

Best in Funds 2016

Founded in 2007, Prophet Equity’s offices are based in Southlake, Texas and partnering with owners and management teams, our team of experts utilises a Holistic Value Creation™ (HVC™) strategy and Prophet Full Potential Value™ (PFPV™) system, that is a Fortune 500 tested and private equity proven, to diagnose and drive dramatic value creation.

n regards to the strategies that Prophet Equity employ, we use proven value creation methods and rely on cross functional knowledge to make controlled investments and drive improvements, in both profits and balance sheets. Collaborating with owners, management teams, external advisors and leading industry experts, our principals have experience in highly complex, special situations and utilise an advanced strategic and operational toolkit to identify and unlock value.

In the wake of the recent Brexit outcome, identifying and closing unique investment opportunities is the lifeblood of our business. Therefore, the Prophet Equity team has developed a robust sourcing process whereby every individual on the team plays an important role in building the Prophet Equity brand among thousands of intermediaries across North America, to ensure we are seeing every opportunity that fits within our investment parameters. Additionally, we have developed a team and a track record for moving faster than our competitors on fast-paced transactions that have to close within an expedited timeline. As a result, we have been able to uncover unique value through our efficient and thorough due diligence process. Looking at the challenges facing Prophet Equity in the private equity sector, while larger acquisition financing opportunities (companies with EBITDA north of $50M) are experiencing credit challenges, the middle market space in which Prophet Equity focuses, continues to see a robust financing environment. Debt providers are particularly interested in finding transactions that are non-energy, non-metals related, and are offering very attractive financing options for those type of opportunities. Company: Prophet Equity Name: Ross Gatlin Email: rgatlin@prophetequity.com Web: www.prophetequity.com Address: 1460 Main St, Suite 200 Southlake, TX 76092 USA Telephone: +1 817 898 1500

Going forward, Prophet Equity believes that private equity will continue to require more and more operational improvement capabilities within the general partnership, rather than relying on third party operating partners. Identifying value creation initiatives on the front end of an investment, from a team that has implemented the initiatives, will also be key in both the short and long term.

Wealth & Finance | September 2016

PRIVATE WEALTH & INVESTMENT WM16046

Award for Excellence in Dividend Performance 2016 – UAE & W&F Pioneer Award for Positive Growth in Real Estate - UAE

Pioneering Investments

Emirates REIT is the UAE’s first regulated real estate investment trust. We interviewed Deputy Chairman and CEO of Emirates REIT Management Mr Sylvain Vieujot to learn more about the firm and examine how it came to achieve its enviable success.

mirates REIT Management, subsidiary of Equitativa Real Estate, is the management firm for the Emirates REIT, a Sharia-compliant REIT designed to support clients seeking to invest in real estate in the UAE. Sylvain talks us through the firm and its pioneering history.

Mitigating risk is a key aspect to any investment firm, and one that Emirates REIT Management takes very seriously, as Sylvain was keen to highlight. “Real estate investments are long term commitments. We mitigate risk through diversification in both asset class and tenants. We also secure long term cash flows by building a rental income with a long weighted average lease term portfolio of over 8 years. This secures the dividend and prevents short term variations due to the market. Within the individual REIT, which is based around a specific asset class and location, we ensure risk averse returns for clients by ensuring that every investment we make is thoroughly researched. For every property we purchase, we check around 80 others, and have a department solely dedicated researching potential investments, meeting with asset owners and developers and generally keeping ahead of the market.”

“Emirates REIT provides REITs for clients seeking to invest in property. Sylvain was the Chairman of Eiffel Holding, which was the holding of Société de la Tour Eiffel, the first French listed REIT. Six years ago he launched the innovative Emirates REIT, which started trading on the Dubai NASDAQ over two years ago.” Based in the Dubai International Financial Centre, Emirates REIT is governed by the Dubai Financial Services Authority and invests exclusively in high-quality, income-producing commercial and education properties. The REIT manager professionally manages the assets it owns in order to maximise revenue and increase the overall performance and value of the REIT. According to Sylvain, the Emirates REIT is unique not just because it is the first such REIT to be offered in the UAE, but because of its accessibility, professionalism and dedication to providing strong returns for its investors.

“Another factor which is key to ensuring that our clients’ investments are secured is that we also take long term loans so that should there be a credit crunch in the market, we are protected against having to re-finance in a negative market.”

“best assets is important, but being professional and gaining the trust of our clients is critical, as this helps us build a long term relationship and ensures that everyone who works with us has a positive experience.”

“Our REIT is the first of its kind in the market for a number of reasons. It is our aim with this and all of our REITs to make real estate investments safe, simple and accessible. Previously the market for real estate investment in many emerging markets has been dominated by Family Offices which did not offer their services to the wider market. “As a REIT, this investment is now available to a wide variety of clients, from financial institutions to private investors. Usually those seeking to invest privately in real estate need to invest large amounts of money, and it requires a strong experience in the market in order to invest in this asset class. Through investing in our REIT, clients can invest in as much money as they choose. They are also safer as the investment is more diversified and is managed by an experienced and dedicated team that ensures their investment is performing.”

This long term view is vital to the firm’s approach and Sylvain emphasises that every member of staff has to be fully committed to this approach.

Wealth & Finance | September 2016

“Real estate investment is about providing a regular income and long term capital appreciation. Internally our firm operates as a close team with this shared goal. We take a long term view of every investment we make, we aim at providing a secure dividend and we support our clients, both tenants and investors alike. “Having professional, dedicated and experienced staff is key to our success. This is because a major part of what sets our firm and its REITs apart from other, similar financial products, is our professionalism. Offering the very best assets is important, but being professional and gaining the trust of our clients is critical, as this helps us build a long term relationship and ensures that everyone who works with us has a positive experience.”

“Although we have achieved phenomenal success in the past few years, Emirates REIT is still relatively young and we look forward to growing our portfolio and working with new clients.” One of the key challenges to working within the real estate investment market is the cyclical nature of the market, which brings with it many great opportunities for firms which have a long term view; are willing to be patient at times, and are ready to act when the opportunities present themselves, as Sylvain describes. “Currently, the real estate market is slowing down, therefore we are taking advantage of this and buying property, as we firmly believe that taking advantage of negative markets is crucial to the success of our REITs. We aim to purchase properties during such down cycles and then reap the benefits when the market recovers. It is this disciplined strategy which has helped our firm achieve the success it enjoys today.” Moving forward, Sylvain believes that there are exciting times ahead for the company, the REIT and the overall real estate market. “Looking to the future, we are keen to capitalise on the opportunities we have found during the currently low market, and are set to launch several new REITs in new asset classes and regions over the next few months. “Recently we launched a new REIT in Morocco and we are aiming to move into new markets as we notice the growing trend for professionalisation of real estate investment in the region. Both institutional and private investors take a great interest in real estate as an asset as they rebalance their portfolio away from fixed income products and because firms such as ours are making real estate investment easier to access and safer.

Company: Emirates REIT Management (Private) Limited Address: Index Tower, East entrance, Level 23, Dubai International Financial Centre, PO Box 482015, Dubai, United Arab Emirates Phone: +971 4 405 73 48 Email: ir@reit.ae Website: https://www.reit.ae

“Although we have achieved phenomenal success in the past few years, Emirates REIT is still relatively young and we look forward to growing our portfolio and working with new clients.”

Wealth & Finance | September 2016

Survey Reveals Disconnect Between Retirement Income Expectations and Reality

RETIREMENT

More than half (58%) of American adults feel confident that they can successfully turn their retirement savings into income after they stop working, according to the 2016 TIAA Lifetime Income Survey. Only 35% are concerned about running out of money in retirement. Yet that confidence could be misplaced – fewer than half (46%) even know how much they have saved in their retirement savings accounts, and just 35% know how much monthly income they’ll have in retirement.

1% are saving 10% or less of their income for retirement, while experts recommend people save at least 10 to 15%. 63% of those who are not retired estimate that they will need less than 75% of their current income to live comfortably in retirement, but most experts recommend that individuals aim to replace 70 to 100% of their pre-retirement income.

Security for retirement income, while 69% of Gen X and 61% of Gen Y say the same. At the same time, Gen X and Gen Y are more likely than Baby Boomers to plan on withdrawals from retirement accounts. Millennials are the most unfamiliar with annuities: 20% said they are familiar, compared to 38% of Gen X and 41% of Baby Boomers. However, they are most likely to say they would be willing to commit a portion of their retirement savings to a choice that will allow them to receive a monthly payment for life.

2% of respondents who are not retired are not saving anything for retirement – yet fewer than half (47%) of those not saving are worried about not having enough money in retirement. 49% say that their retirement plan’s No. 1 goal should be to provide guaranteed monthly income in retirement, but 41% are unsure if their current plan provides an option for lifetime income.

Differences among people at different income levels are even more stark than generational differences. People with incomes over $100,000 per year are more likely to draw on a wide array of options than people with incomes under $50,000 per year. For instance, 69% of those at the higher income level plan to withdraw savings from a retirement plan, compared to 41% of those at the lower level, and they are more likely to get payments from a pension plan (40 % vs. 19%). They are also more likely to plan on income from annuities (27 % vs. 10%).

“Today, people are living longer and spending more years in retirement, which can mean outliving their retirement savings if they don’t plan carefully for the years ahead. Saving is crucial, but it’s not enough,” said Roger W. Ferguson, Jr., president and CEO at TIAA. “Workers also need to take a realistic look at what their expenses will be, and make a plan to generate reliable monthly income to cover those expenses in retirement. Guaranteed income for life is critical to a long, comfortable retirement.”

But even if people with higher incomes are tapping more options for lifetime income, they still may be putting more emphasis on saving for retirement than generating income. There was a significant gap between the %age of people in the higher income bracket who know how much they have in their retirement savings (70% know exactly or approximately how much) and the %age of people in the lower bracket (29%). However, that gap narrowed when we asked if they knew how much income they would get each month in retirement: 45% of those in the higher bracket knew exactly or approximately, compared to 27% of those in the lower bracket.

Planning for Lifetime Income Understanding how to create income in retirement doesn’t just help people succeed in the long run; it can bolster their confidence today. Only 28% of those who have analysed how their savings will translate into retirement income are concerned about running out of money after they stop working, as opposed to 40% of those who have not done the analysis.

“Many people focus on how much they have saved, without considering how their savings will translate into income,” Ferguson said. “Until recently, many financial services companies did the same. But at TIAA, we have always put emphasis on working to provide retirees with a consistent and reliable source of income that lasts throughout retirement.”

Americans are turning to many sources for generating monthly income in retirement. 73% of respondents plan to use Social Security, and 29% will use funds from a defined benefit pension plan. 54% will rely on withdrawals from retirement accounts like a 401(k), 403(b) or IRA – but relying on withdrawals could mean outliving their retirement savings. Only 14% plan to use annuities, even though they can offer the option of turning savings into guaranteed income throughout retirement.

Turning to Employers for Direction Many Americans are looking for help from their employers in accessing lifetime income options. Among those whose retirement plan does not offer or who do not know if their plan offers this kind of option, 56 % would be interested in a retirement plan that does. In fact, 62% say they would prefer a lifetime income option offered by their employer, compared to 31% who would prefer to purchase it themselves.

“Too often overlooked, annuities can provide income for as long as you live – even when your other retirement savings run out (1),” said Ferguson. “Rather than attempting to stretch a lump sum of savings over a retirement that could last several decades, retirees can budget for living expenses and better weather unexpected challenges if they have a reliable source of monthly income.”

Employers may play an especially important role in helping younger workers. While Gen Y respondents are the least likely generation to say they’re familiar with annuities (20% compared to 34 % overall), more than half (55%) would be willing to commit a portion of their retirement savings to a choice that will allow them to receive monthly lifetime payments.

In fact, when given a choice among several lifetime benefits, 68% would first choose a retirement ‘pay cheque’ that lasts as long as they live over shinier options like an unlimited lifetime airline ticket (9 %) or a new car every year for the rest of their lives (9%). However, only 43% are willing to commit a portion of their retirement savings to a choice that would allow them to receive a monthly payment for life.

“Planning for retirement can be a daunting task, and individuals look to their employers for direction,” said Ferguson. “By understanding employees’ ultimate retirement plan goals, such as providing guaranteed monthly income, employers can make sure they’re offering investment options and savings tools that can meet their employees’ needs.”

Retirement Income Strategies Vary by Generation, Income Levels Despite a common desire for reliable monthly income in retirement, the survey results capture differences among generations and among income levels when it comes to choosing savings vehicles to generate that income. For example, 84% of Baby Boomers plan to rely on Social

(1) Guarantees are subject to the claims-paying ability of the issuing company. 43

Wealth & Finance | September 2016

The Worst Ever Year for Annuity Income Marking Pensions Awareness Day (PAD) in mid-September, new research compiled by Moneyfacts has revealed that annuity rates are on track for their biggest ever annual fall. Based on a benchmark annuity (standard level without guarantee), the average annuity income for a 65-year-old has fallen by 14.8% on a £10K purchase price and by 15% on a £50K purchase price so far during 2016.

hese figures easily surpass the previous highest annual annuity income fall of 11.5% recorded in 2012 (see below). Although there are more than three months of the year remaining, it is unlikely that the current economic environment will facilitate a strong enough recovery in annuity rates to avoid it picking up the unwanted tag of being the worst ever year for annuity rates.

Richard Eagling, head of pensions at Moneyfacts, said: “2016 has been a truly awful year for annuity rates, with rates falling to all-time lows. This is particularly disappointing as the stock market volatility that we are experiencing has re-emphasised the importance of a secure lifetime income for many retirees. “Unfortunately, record low gilt yields following the EU referendum result, the impact of Solvency II legislation and a significant weakening of competition in the annuity market have all exerted considerable downward pressure on annuity rates during 2016.”

Average Annual Change in Pension Annuity Income since 2006 Figures based on a male aged 65 purchasing a standard level without guarantee annuity Calendar year Average annual change in annuity income 2006 1.3% 2007 4.4% 2008 -2.2% 2009 -8.7% 2010 -2.7% 2011 -8.4% 2012 -11.5% 2013 9.1% 2014 -5.7% 2015 -3.1% 2016 -14.8% Source: Investment Life and Pensions Moneyfacts

Web: http://moneyfacts.co.uk/

RETIREMENT

Pensions Dashboard Prototype to Be Ready by Spring 2017 On 12th September at the Aviva Digital Garage, the UK’s Economic Secretary to the Treasury, Simon Kirby, announced that a prototype of the Pensions Dashboard will be ready by March 2017.

he Treasury has successfully secured agreement from eleven of the largest pension providers - Aviva, Aon, HSBC, LV=, NEST, Now: Pensions, People’s Pension, Royal London, Standard Life, Zurich and Willis Towers Watson - to build the first prototype of its kind in the UK. The ABI has also agreed to manage the pilot project.

“The Pensions Dashboard will unlock a huge amount of information that will help people make the best choices for them and I am delighted that eleven of the largest pension providers have agreed to work together to build a working prototype by March 2017.” Aviva’s chief digital officer, Andrew Brem, commented: “I’m delighted to host the launch of the Pensions Dashboard at Aviva’s Digital Garage. The Pensions Dashboard is a vital tool in increasing engagement with savings and I’m really pleased that we are working on the pilot. As an industry we need to make it as easy as possible for people to get a view of all their retirement savings in one place to help them take control of their future.”

The Pensions Dashboard is a platform that lets savers see all their pension pots in one place and will help them to plan for their retirement more effectively. On average, a person can have 11 employers over their working life, which means that they could end up with almost a dozen private pensions by the time they retire.

CEO of the People’s Pension, Patrick Heath-Lay, added: “The Pensions Dashboard has the opportunity to change the way the we do pensions, delivering an infrastructure that has the potential to allow people the opportunity to see all their pensions in one place whilst driving greater efficiency within the pensions system. But it must be built first and foremost for savers and have strong, independent, ownership and governance.

At the moment there is no way for people to see the value of all of their pensions in one place and research has shown that over a third of people approaching retirement find it difficult to keep track of their pension pots.

“The Pensions Dashboard is a vital tool in increasing engagement with savings and I’m really pleased that we are working on the pilot.”

“It is great that the government and industry are working together to make this a reality. It is crucial that we all make the most of this opportunity and the industry as a whole embraces the dashboard. The Pensions Dashboard, first announced at Budget 2016, is the latest step in the government’s wider strategy to help people to engage with their pensions earlier rather than nearing the point of retirement.”

The pensions dashboard aims to also provide a link to ‘lost’ pension pots with previous employers and could help release the £400 million worth of pensions savings that the Department for Work and Pension estimate are currently unclaimed. It could also prompt people to seek advice as to whether their pension savings are in the best place.

Earlier this month, the government launched a consultation on the new Pensions Advice Allowance. This allowance, which will come into force from April 2017, will allow people nearing retirement to take up to £500 out of their pension pots tax-free to put towards the cost of financial advice. This means that an individual can receive advice on all the financial products that contribute towards their retirement income, such as multiple pension pots and other assets like ISA savings.

The Economic Secretary, Simon Kirby, said: “Pensions and savings decisions are some of the most important a person will make during their lifetime. The government is determined to make sure people can access the information they need to plan effectively for their future. Technology, like mobile phone apps, has made day to day banking easier than it’s ever been and it is time for pensions to catch up. Think of a future where you can compare your pension pots with the touch of a button.

At the event, ‘Building the Pensions Dashboard – the vision and next steps’, the Economic Secretary set out the government’s vision for the dashboard as an open, flexible, reliable, FinTech based model. To show how important FinTech is to the modern pensions industry, the event also included a ‘pitchathon’ where a number of FinTech companies set out the opportunities they see in getting involved in building a pensions dashboard.

Wealth & Finance | September 2016

Fidelity to Launch Its First Suite of Factor-Based ETFs Fidelity Investments®, one of the industry’s leading providers of exchange traded funds (ETFs) with more than $250 billion in ETF assets under administration, announced it will expand its line-up of ETFs for individual investors and financial advisors with the introduction of the company’s first suite of factor-based ETFs.

idelity have a total of six new factor-based ETFs are trading on the New York Stock Exchange in September 2016. Each of the new ETFs will be competitively priced with total expense ratios of just 0.29%. In addition, individual investors and advisors will be able to purchase each of the new ETFs online through one of Fidelity’s brokerage platforms (commission-free).

with our portfolio managers and fundamental analysts to develop factor models that incorporate what we believe are the best stock drivers from both fundamental and quantitative perspectives. We are now making this expertise available directly to our customers through our new ETFs.”

“Fidelity has been executing on its ETF strategy for some time, and our success can be seen in the one quarter of a trillion dollars in ETF assets under administration that customers have entrusted to us, representing about 11% of all U.S.-domiciled ETF assets,” said Anthony Rochte, president of SelectCo, the company’s dedicated sector investing and ETF services division. “Launching the six factor-based ETFs reinforces our commitment to expanding Fidelity’s ETF investment manufacturing capabilities, while delivering an exceptional customer experience that is centred on providing choice, value and expertise.” Once the six new factor-based ETFs are launched, customers will have access to 91 commission-free ETFs, including three Fidelity actively-managed bond ETFs, 11 Fidelity passive equity sector ETFs, Fidelity ONEQ, and 70 passive iShares ETFs. Investment factors -- such as size, value, momentum, quality, and low volatility -- are at the core of ‘smart’ or ‘strategic’ beta strategies, and are investment characteristics that can enhance portfolios over time. And like traditional ETFs, factor-based ETFs can be used to build a well-diversified portfolio as well as potentially help improve returns and manage risk over time. Fidelity’s six new ETFs, which will track proprietary indices, combine the company’s legacy of fundamental research with factor-based insights by our team of quantitative research analysts, while also leveraging Fidelity’s expertise and scale in managing index-based portfolios that are designed to provide customers with an outcome-oriented portfolio diversifier using a rules-based approach. “Factor-based investing is one of the fastest growing areas of the ETF industry and an area where we believe our proven research capabilities and experience can add value for our customers,” said Joe DeSantis, chief investment officer in Fidelity’s Equity division. “For nearly a decade, Fidelity’s quantitative research team has been working collaboratively

FUND MANAGEMENT

Equity Crowdfunding Comes of Age Seedrs, a leading European equity crowdfunding platform, has published an in-depth, ground-breaking analysis of the deals funded on its platform.

ts Portfolio Update looks at the characteristics and performance of the 253 deals funded on the Seedrs platform between its launch in July 2012 and the end of 2015. In addition to revealing useful information about the types of deals funded through Seedrs, the Portfolio Update shows that Seedrs investments have, on a fair value basis, outperformed most other asset classes.

It is worth observing that Seedrs was able to obtain much of the information required to make these fair value determinations in a robust and verifiable way, which involved exercising the information rights it holds in its capacity as nominee for each investment. One of the benefits to investors in Seedrs acting as nominee—and entering into subscription and/or shareholders’ agreements with each investee company—is that the platform has reliable access to ongoing information about the performance of the investments. Platforms and networks that do not have the comprehensive information rights granted in these agreements do not have access to the same level of information.

The update found that roughly 40% of Seedrs’s deals have been for digital businesses, and 20% for non-digital. The remaining 40% have been hybrid digital/non-digital models. Furthermore, nearly 60% of its deals have been for B2C businesses, with 30% for B2B ones and the remaining 10% for businesses with both B2C and B2B models.

Jeff Lynn, CEO and co-founder of Seedrs comments: “The release of this Portfolio Update is momentous for Seedrs. I co-founded the business in 2009 because I am a strong believer that a portfolio of early-stage investments can produce great returns for investors large and small. Now, for the first time, we have the data to prove it. The Seedrs portfolio has achieved an IRR in excess of nearly every other asset class, and that’s even without taking into account the impact of tax reliefs. As importantly, our active investors have shown that, on average, they can beat the market, using Seedrs to build portfolios of outperformers. It is difficult to overstate the importance of this data: it is a game-changer for us and for the many investors from all over Europe (and, soon, the United States) who allocate capital through our platform.”

Of Seedrs’s 15 sectors, the three most popular in terms of number of funded deals have been Food & Beverage (11% of deals), Finance & Payments (11%) and Travel, Leisure & Sport (10%). In terms of performance, the platform-wide internal rate of return (IRR), which means the annualised performance of all 253 deals in terms of share price appreciation (net of fees), as of 31 July 2016 was 14.44% on a non-tax-adjusted basis. When the impacts of tax reliefs and liabilities are taken into account, this goes up to 41.87%.

Seedrs investor Robin Vaudrey, head of CEE region at the European Investment Fund (EIF) in Luxembourg, says: “My work at the EIF, the largest investor into European venture capital, has brought me close to the cutting edge of European technology and innovation, but until I came across Seedrs the opportunity to personally invest in such exciting new ventures did not exist given the traditional barriers to investing in private companies. I find the investment propositions attractive even without any additional tax incentives, as I am resident on the continent and not a UK taxpayer. I find the level of professionalism of most other investors, the fundraising entrepreneurs, and the Seedrs platform itself, to be very high. I’m particularly pleased Seedrs uses private equity industry best practice for valuations.”

Moreover, investors who have built portfolios of 20 or more investments have, on average, outperformed the overall market. They have achieved an average 15.01% nontax- adjusted IRR (tax-adjusted: 43.39%). Businesses with hybrid digital/non-digital elements to their models have performed better than pure digital and pure non-digital businesses on average, achieving a non-tax-adjusted IRR of 16.88% (tax-adjusted: 42.78%). Businesses with both B2B and B2C models have outperformed pure B2B and B2C businesses on average, with an 18.27% non-tax-adjusted IRR (tax-adjusted: 41.74%). The three best performing sectors to date have been Food & Beverage, with a 22.77% non-tax-adjusted IRR (tax-adjusted: 49.73%); Home & Personal, with a 17.79% non-tax-adjusted IRR (tax-adjusted: 57.76%); and Finance & Payments, with a 16.91% non-tax-adjusted IRR (tax-adjusted: 43.20%).

Seedrs investor Julian Sutton, a financial consultant based in London, says: “Seedrs offers me an exciting opportunity to build a diverse investment portfolio in a previously inaccessible asset class. So far, as you would expect, some businesses have not succeeded, but many are showing strong paper returns. Short term I can claim up to 50% tax relief from eligible campaigns, long term I hope for significant gains.”

Ernst & Young LLP (EY) reviewed the procedures and processes used by Seedrs for determining the estimates of fair value used to calculate the investment performance numbers, and EY considers that they are in line with the industry guidance set forth in the International Private Equity Valuation (IPEV) Guidelines.

Seedrs has now funded more than 380 deals since launch in July 2012, with more than £150 million invested on the platform to date. According to Beauhurst, a leading third-party source of objective deep data on UK startups and scale ups, Seedrs is the UK’s most active investor in private companies. 47

Wealth & Finance | September 2016

FUND MANAGEMENT 1609MS19

Best in Funds 2016

A Differentiated Approach

Quercus Investment Partners Limited specialises in utility-scale renewable energy infrastructure investments across Europe. They provide access to attractive, stable and long-term returns by leveraging their unique sourcing abilities and the strength of their management. As well as offering arrangement and asset management services, Quercus also provides value added advisory services to investors interested in allocating capital to renewable energy infrastructure projects. Diego Biasi, the firm’s Co-founder and CEO lifts the lid on the firm’s investments in renewable energy projects throughout Europe.

iven the characteristic return profile of Quercus’s investments, which are characterized by stable and predictable cash flows, “our investors are primarily institutional clients such as pension funds, the banking sector, and insurance companies” Biasi reveals.

optimise them by leveraging its close ties with first-tier contractors, and we can exit investments in a very effective way due to the contacts we have with other energy investors and operators” he says. Quercus boasts a specific mix of expertise, including M&A legal services for renewable energy projects and within renewable energy engineering. “When we buy a project, we go in and deploy all the expertise from our staff members, who optimise each investment from every possible point of view.”

In addition, Biasi believes that the firm has many competitive advantages, chief amongst all the return profile of investments, which is very attractive for institutional investors who have a large balance sheet and liability-driven portfolios.

The opportunity Quercus sees in the Italian market is one of consolidation, indeed there has been a great deal of renewable energy plants built in the country because of the very high incentives they offer. In 2014 however, the government in Italy cut these incentives, significantly thwarting the returns of many small investors who entered the renewable energy space without possessing the necessary expertise to face this new regulatory development in an effective way. While these small investors are very keen to exit their investments, Quercus sees the opportunity to purchase their plants, thus “consolidating the market and creating economies of scale, while also leveraging its expertise in the sector and optimising the plants’ financial and operational performance,” Biasi concludes.

It is ideal for pension funds to invest in Quercus’s products because they will receive a stable and predictable cash flow during the life of the fund. Biasi underlines that this form of investment is highly uncorrelated with “traditional financial markets, equities and bonds.” Moreover, as opposed to its main competitors, which are often very large organizations with very lengthy decision-making processes, Quercus has a very nimble structure. As such, it is capable of making decisions very quickly, which enables the company , “to source and execute deals where larger organisations would not have the speed of execution in place,” Biasi underlines. Quercus’s first two funds were in the construction sector, something the firm has developed a strong track record in, in addition to their noted expertise in mergers and acquisitions (M&A). “When we purchase a plant, we can go in, optimise it and maximise its performance from a financial and an operational perspective” Biasi explained. It is quite unusual for such a firm to have such a deep expertise in construction in addition to M&A, he goes on to say.

Company: Quercus Investment Partners Limited Name: Diego Biasi, Co-founder and CEO Email: info@quercus-partners.com Web Address: www.quercus-partners.com Address: 11 Albemarle Street London W1S 4HH UK Telephone: +44 20 7871 4533

Biasi also highlights Quercus’s very strong network of partners in Europe, particularly in Italy but also in the UK and in Scandinavian countries. In this vein, Quercus “can source the best projects in the private sector and

Wealth & Finance | September 2016

FUND MANAGEMENT 1607MS21

Have Hope and Don’t Give Up

Fund Manager Elite 2016

In a nutshell, Allied Wallet’s astounding Next Gen Payment Gateway allows for simpler integrations for merchants and payment processors. Following on from the firm’s recent 10th anniversary, Dr. Andy Khawaja reflects on the phenomenal impact his firm has had and where he sees it going in the future, such as plans to put it on the New York Stock Exchange by the second quarter of 2017. The biggest problem today is that banks are not giving entrepreneurs the chance to invest in any businesses, but Allied Wallet invest in them and enable them to succeed. By doing this, Allied Wallet are creating more jobs and helping entrepreneurs fulfil their dreams. Dr. Andy Khawaja’s message is for entrepreneurs not to give up, but to have hope, even if they fail and encounter problems on the way.

ow would you introduce your services to someone who has never heard of Allied Wallet before? I would describe Allied Wallet in three steps. Firstly, we are a company who can accommodate B2B merchants in a single shopping cart used for transactions.

Secondly, you can be in anywhere in the world and we can carry out your transaction in its local currency. Lastly, but certainly not least, we have a state-of-the-art gateway to handle any sort of transaction or payment method, and is also one of the safest tools for the prevention of fraud and ensuring the safety of our customers. As a result of the quality of the services we provide, we have expanded our company to having offices around the world, including London, California, Frankfurt, Hong Kong and India.

Wealth & Finance | September 2016

â&#x20AC;&#x153;I would simply say to have hope and do not give up. If all the doors are closing on your face, still do not give up.â&#x20AC;?

Following on from celebrating Allied Wallet’s 10th year anniversary earlier this year, what reflections do you have about the growth of the company? Allied Wallet are constantly growing and I am pleased to say that we signed up with Merrill Lynch six months ago, and we are also looking at putting Allied Wallet on the New York Stock Exchange by the second quarter of 2017. The future of the company is based on creating even more opportunities for entrepreneurs and allowing an even greater number of merchants to process online. I want to make sure that we can spread to more regions and make sure that everybody will have the access to secure payments via mobile or online. How does Allied Wallet approach clients? Allied Wallet serve all of our clients in a very professional way. We try to understand what is they are selling, what it is they have and trying to achieve, and where their customers are located so we can accommodate them. For example, if you try and serve customers in Germany and Scandinavian countries, they tend to use payment methods like Giropay or Klarna, instead of Mastercard or Visa. So what we do, is include that as a payment option for our services, and in this way we can increasingly accommodate them. The view of Allied Wallet is that we do not have any competition, as I believe that what we are doing in the market is very unique. We provide services centred on what the customer needs, and customise them in a way that can accommodate the merchants and make sure that they do not shop around. When you go to a bank, all they do for you is to activate an account for you. With Allied Wallet, we can accept almost every payment on the earth, and customise it to work for them. We have 155 million users worldwide, so when you have the Allied Wallet logo on it, you have options that our wallet members can start using. It is a no brainer really! What opportunities are you looking out for at the moment? Allied Wallet are looking at what has happened with Alibaba, in terms of their virtual mall which is doing very well in China at the moment. So we are basically looking at having a similar product that is very similar to Amazon, Alibaba and eBay but which is exclusive to Allied Wallet. It is going to be hosting about 3 million shops in there, hopefully getting a billion users per day within 72 months. What is the biggest problem facing entrepreneurs today? The biggest problem is that banks are not giving entrepreneurs the chance to invest in any businesses today. Allied Wallet believe in business and invest in them and give them to chance. We give them a virtual line of credit where we open the account without a deposit or a security, whereas banks just say ‘no’. We say ‘yes’, and invest in businesses with our product and give them the chance to succeed. If you do not invest today, they may never will. What impact is Allied Wallet having on the world today? We have had a truly phenomenal impact. We are creating more jobs, and are helping more and more entrepreneurs fulfil their ideas. We have given them the chance, and invested in their idea so we can help them build up their idea, build up their business and help grow the economy. What advice would you impart to inspire upcoming entrepreneurs? I would simply say to have hope and do not give up. If all the doors are closing on your face, still do not give up. One of the most important things from my experience is not being afraid to fail. Failing is not a loss, but at the start. Nobody succeeds straight way, but we all encounter problems along the way.

Company: Allied Wallet, Ltd. Web: www.alliedwallet.com

1607CK16

Carmichael Associates USA Financial Services Top 100

2535 Townsgate Road, Suite 213, Thousand Oaks, CA 91361 USA 001 805 379 9374 Stan@Carmicassoc.com

Wealth & Finance | September 2016

ALTERNATIVE INVESTMENT

Fitch: Closed-End Fund Financing Shifts on Regulatory Fallout Regulatory pressure is likely to drive further changes in financing for taxable and municipal ClosedEnd Funds (CEF), according to the new Closed-End Fund Leverage Dashboard from Fitch Ratings.

“R

egulatory pressure on bank balance sheets is driving up costs for taxable funds and resulting in fewer options for bank funding,” said Greg Fayvilevich, senior director, Fitch Ratings.

Municipal funds have recently come under pressures related to money-market fund (MMF) reform taking affect in October. Municipal MMFs have traditionally been a large supplier of financing to CEFs via purchases of Variable Rate Demand Preferred (VRDP) shares. However, municipal MMF assets have been steadily declining which translates to a decline in MMF demand for VRDP shares issued by CEFs.

Taxable CEFs have experienced decreasing availability of financing from certain counterparties such as asset-backed commercial paper (ABCP) conduits. Borrowings from asset-backed commercial paper conduits by closed-end funds have declined by approximately 60% since late 2014, much of which has been replaced by syndicated credit facilities.

Recent new issuance of municipal CEF leverage has relied on banks via Variable Rate MuniFund Term Preferred (VMTP) Shares and short-term bond funds via Institutional MuniFund Term Preferred (iMTP) Shares. Fitch also observes VRDPs being placed directly with the liquidity provider bank for a certain term (Term VRDP), which has replaced some demand of municipal MMFs.

“In the future, banks and other CEF participants could share or shift risk with syndication of CEF lending facilities or lending through special purpose vehicles,” added Fayvilevich.

MLP funds were notably absent from CEF new leverage issuance until September 2016 following a period of significant deleveraging in last half of 2015 and first half of 2016, largely due to oil price volatility. Fitch expects MLP issuance to pick-up as MLP asset prices stabilise.

Wealth & Finance | September 2016

ALTERNATIVE INVESTMENT

Gemini Alt Surpasses $500 Million in Assets on Managed Account Platform Gemini Alternative Funds, LLC has surpassed $500 million in invested assets on its Galaxy Plus Fund managed account platform as of August 2016.

“A

t a time when the demand for access to alternative strategies continues to increase, our platform enables investors to access alternative strategies from a variety of advisors with the same degree of transparency and control—and lower fees— they experience when investing in mutual funds,” said David Young, president of Gemini Alt. “The rapid growth of Galaxy Plus is a testament to our ability to help investors create their own investing solutions for obtaining risk-managed returns and diversification with alternative strategies.”

Furthermore, Gemini Alt conducts qualitative and quantitative due diligence on fund advisors, as well as counter-party risk assessments on all clearing relationships. In addition, Gemini Alt works with institutions to identify a cost-effective solution by building a dedicated managed account for investors to access alternative fund strategies on the platform. Gemini Alt also leverages its extensive sales and distribution network available through The Gemini Companies to help advisers reach a wide audience of investors, including mutual funds, family offices, high-networth individuals, pension plans, insurance companies, endowments and foundations, and private equity. As of August 2016, alternative strategies from 20 different advisors are fully funded and available on Galaxy Plus, including managed futures, commodities, real estate, hedge funds, foreign equities and derivatives contracts.

Gemini Alt (http://www.geminialt.com) launched the Galaxy Plus Fund platform in December 2014. Galaxy’s open-architecture infrastructure provides all investors, regardless of investment size, an institutional-level investing experience. It provides access to a variety of alternative investment strategies with lower investment minimums, transparency, access to near real-time data, notional funding capabilities, risk monitoring and management services, and frequent liquidity.

“Gemini Alt serves as a conflict-free ‘one-stop shop’ for investing in alternatives, benefiting both investors and advisors,” said Andrew Rogers, chief executive officer of the Gemini Companies. “We will continue to deploy the vast resources and expertise under our umbrella to personalize and simplify alternative investing for these audiences.”

BANKING

NPL Initiative Website Will Be Information Hub for Emerging Europe’s Banking Sector A new website (http://npl.vienna-initiative.com/) will help strengthen emerging Europe’s banking system by sharing information about NPLs (non-performing loans) and ways of countering the risks that they represent.

he website has been launched under the broader umbrella of the Vienna Initiative, itself a framework for enhancing the financial security of emerging Europe backed by the European Commission, EIB, EBRD, IMF and World Bank Group.

Its NPL Initiative draws on work specific to NPLs within the IMF, World Bank, EIB, European Commission and the EBRD, and is managed by a small group of experts within the EBRD. The NPL Initiative’s action plan focuses on: • Enhancing the overall transparency and adequacy of NPL resolution frameworks, with the creation of the NPL Initiative website, in-country workshops and in-depth analysis of national impediments to sound NPL restructuring and sales; • Facilitating knowledge sharing, via the NPL Initiative website as a ‘knowledge hub’ for the industry and the support and distribution of expert publications on relevant topics. • Providing technical assistance and other capacity building, in coordination between the principal international organisations and EU bodies and; • Facilitating training in modern restructuring principles to build a better understanding among private market participants.

Europe’s largest banks still hold approximately €1.1 trillion of NPLs, undermining both their stability and capacity to undertake new lending. The Central, Eastern and South-Eastern Europe (CESEE) region still contains some of Europe’s highest and most persistent levels of NPL stocks. Given that CESEE countries are important hosts to foreign banks headquartered predominantly in Western Europe, enhancing NPL resolution and transactions in the region remain a key priority for European stakeholders. Bojan Markovic, EBRD deputy director of economics, policy and governance, said: “Resolving the NPL issue remains a critical task for the recovery of the banking sector. It is a precondition for the resumption of stronger, yet sound lending which would fuel more vibrant growth. This new website makes an important contribution by providing transparent and accessible information to the public and professional stakeholders.”

The NPL Initiative website features publicly stated national reform commitments and summarises ongoing support by international institutions. The content on the website also includes: • A regional overview on trends in NPL vulnerabilities and information on debt transactions in a new semi-annual Regional NPL Monitor; • Detail on the progress in restructuring and reforms in 11 countries; • Upcoming regional and country-specific conferences; • Notes on best practices relevant to policy makers; • A collection of other relevant material from the European Commission, EIB, EBRD, IMF and World Bank Group and some industry publications as well as; • Recent academic research and; • Training resources.

While CESEE economies have gained much experience in the area of NPL resolution and debt restructuring in recent years, greater transparency and the implementation of robust NPL reform agendas are still a priority. National laws, regulations, infrastructures and frameworks need to support and promote efficient restructuring and resolution of distressed exposures and allow fully functioning markets for the sale of NPLs. Banks and legal and judicial professionals must also have access to adequate levels of training and awareness of international best practices to allow effective implementation of solutions.

Web Address: www.ebrd.com Lastly, investors must be made aware of progress occurring in each jurisdiction in order to stimulate confidence and attract capital and specialised resources. The Vienna Initiative has long recognised NPLs as a key impediment for a revival in credit market and economic growth.

www.wealthandfinance-intl.com Wealth & Finance | September 2016

Analysis of UK Company Long-Term Debt and Charges Reveals Strong Challenger Bank Lending Avention, maker of OneSource® Solutions for smarter business insights, on 5th September published its findings from an analysis of the mortgages and charges entries of over five million UK companies on its database, which was carried out to assess the strength of challenger bank lending across the UK.

The sectors that have the highest proportion of mortgages and charges with challenger banks are in Utilities & Energy and Healthcare – 50.3% and 46.2% respectively. According to Avention’s research, challenger banks are least likely to provide corporate bank loans to companies in the Finance sector.

he research comes as increasing numbers of new challengers continue to enter the market, seeking to loosen the stranglehold of the Big Five banks. Despite an uncertain period for the challenger banks in the wake of Brexit, Shawbrook, Metro Bank and Virgin Money all reported strong first-half results in July 2016.

Paul Charmatz, senior vice president of Avention’s International business, commented: “Avention’s data shows the significant market share that challenger banks enjoy when it comes to corporate lending, particularly the smaller challengers. Avention will continue to monitor this data and re-analyse it in 6 months’ time. It will be interesting to see if our market insights continue to point to the success of challenger banks in the UK – and whether the same regional and sector trends are evident.”

Highlights of the initial analysis are as follows: • 34.4% of all UK business mortgages and charges are with challenger banks; • 32% of loans are issued by smaller challenger banks; • Percentage of corporate debt with challenger banks is lower in London than any other region in the UK; • Corporate lending from challenger banks more dominant in Scotland and the North of England than in the South; • Businesses in the utility & energy and healthcare sectors are embracing challenger banks, while the Finance sector remains more reticent.

Avention used KMPG’s definition of challenger banks, which distinguishes between smaller challengers, such as Metro Bank and Aldermore, and larger challengers, such as TSB and Virgin Money. A mortgage or charge is defined as the security a company gives for a loan.

Findings showed that as at the end of April 2016, more than a third (34.4%) of UK corporate bank debt was with challenger banks. The vast majority, 32%, was with those classed as smaller challenger banks, such as Metro Bank, Aldermore, AIB, Close Brothers, OneSavings Bank, Shawbrook Group and Secure Trust Bank.

Web: www.templebaradvisory.com

The regional figures reveal some stark contrasts, with 25.4% of central London corporate bank debt issued by challenger banks, compared to 46.5% in Northern Scotland. The data also reveals a clear discrepancy between North and South, with challenger bank corporate loan figures having dominance in the northern parts of the United Kingdom.

BANKING

Shaping the next Generation of Digital Banking: GFT and Fidor Form an Innovation Partnership Together toward the future of digital banking. Effective immediately, Fidor AG and GFT Technologies SE have reinforced their cooperation and signed a strategic partnership agreement to focus on developing mobile financial and banking apps, as well as the related sales and marketing. It’s an initial step to shape the next generation of digital banking within a strong network.

ne main pillar will be GFT’s Digital Innovation Labs, where both parties will combine their expertise to develop ideas, innovations and prototypes. The team will employ agile development to make the prototypes market-ready, and the resulting products will be put on the market quickly as possible. GFT and Fidor have already developed the new O2 Banking’ solution together, which will be Germany’s first mobile-only, full-service bank account. Since last week, the app is available within the Apple Store.

– particularly in the financial sector. GFT has almost 30 years of experience in implementing complex IT projects. Fidor will ideally complement our solution portfolio in the digital banking area. It’s set out to be the perfect match”, says Marika Lulay, COO of GFT Technologies SE. GFT’s Innovation Labs are already a proving ground for today and tomorrow’s digital banking environment. “Everything revolves around co-innovation, ensuring all key stakeholders are included in the design of the customer experience right from the very start. We’ve got a lot of plans to shape the digital future of banks!”

The partnership also includes the sales and marketing of Fidor Operating Systems (fOS). “Both parties had very positive experiences together during our first cooperation, O2 banking. It’s simply a matter of logic to continue working together. Our cooperation with GFT will allow us to be even more efficient in developing new offerings for the future of mobile banking”, says Matthias Kröner, CEO of Fidor AG.

Customer needs are changing as the possibilities of digitalisation continue to grow – and it’s more than a matter of keeping pace; it’s about shaping new developments for the long term.

“We’ll be pursuing new paths together primarily in the areas of prototyping and international sales”. After the recently announced acquisition by the second-largest banking group in France, BPCE, the Fidor Group plans to not only develop domestic markets and expand internationally, but continue focusing on technological advancement as well. “We’re well-positioned for the future and we want to be the leaders in innovation so that we can continue to spearhead contemporary banking”, adds Kröner. GFT is a renowned industry specialist in the financial sector that operates worldwide. A team of 4,500 employees in 12 countries supports leading banks and insurance companies with advisory, creative and technology capabilities. “The market for IT digitalisation solutions continues to grow

Vivier headquartered in Auckland, New Zealand

Wealth & Finance | September 2016

BANKING 1609MS13

Go Beyond Traditional Banking Vivier is a multinational banking & financial services group of companies providing its services through regions across Africa, Asia, Oceania, Europe and South America. It comprises of Vivier & Co a boutique financial services firm, and launching shortly Vivier Growth Fund.

ivier & Co provides a personal approach to preserving and growing your wealth through its core service of savings accounts featuring above average returns, without market volatility risk. They achieve this by making highly selective loans, secured against real estate. Vivier also offer accounts to those who require an international presence; an overseas current or savings account provides flexibility, discretion and in many cases enhanced security and confidentiality.

risk from market volatility significantly. Additionally, Vivier & Co aims for capital reserves above 15% of tier I risk-weighted assets, and such a conservative level compares very favourably with the Basel ratios. Vivier has been primarily focused on the main English-speaking markets, although they are now starting to evolve from that. Future planned expansion for them includes the setup of banking representation in the Caribbean and South Asia. So as to expand further in these regions, they are also considering countries in Central America and Indonesia as potential bases. Other impending developments for the bank include increasing their customer service capability in the Spanish speaking markets of Spain, Mexico and Colombia.

The team at Vivier & Co consists of experts with extensive financial experience across many sectors, who apply conservative and risk-averse business practices towards helping manage, preserve and enhance you and your family’s wealth. They believe that you will find their global perspective, unique team approach, and tailored solutions not only distinguish them from other private banks, but are able to provide you with the kind of banking expertise, performance and security you require in the ongoing management of all your financial affairs.

If your financial needs aren’t being addressed by your current retail bank, then Vivier may provide you with the solution you’re looking for. By building a strong business and personal relationship with you, they aim to be your advisor on financial issues, understanding your objectives and working with you towards your goals. To ensure satisfaction, they protect your capital and provide positive performance over the long-term.

With regard to their products and services; Vivier & Co offers a complete financial package which includes current accounts, savings accounts, debit cards, an online platform, and international money transfers. In addition, they also offer escrow accounts which assist companies to facilitate international trade and mitigate their risk on critical transactions.

“If your financial needs aren’t being addressed by your current retail bank, then Vivier may provide you with the solution you’re looking for.”

The last decade has shown that the global credit crunch has had relatively little effect on the New Zealand banking sector. In part, this fortunate stability was a result of the health of the country’s financial market and lending sector, which has always faced much sterner regulation and control than many other countries during the boom years, between 2002 and 2007.

To get started with a bank that values transparency, customer service, and strong relationships, visit their website today at vivierbank.com.

For such reasons, since the 1990s, New Zealand has been the destination of choice for global investors, who have been well rewarded for their confidence. In particular those from countries such as Japan and China, who have flocked to invest their household savings due to the country offering these investors interest rates well above their domestic offerings. In terms of Vivier & Co’s client approach, they believe that their clients’ investments are the firm’s number one priority. They maintain a high degree of management attention to ensure that their investments are secure, as well as always taking appropriate security in relation to the underlying assets, with a prudent loan-to-value ratio. Apart from hedges to safeguard foreign exchange exposure, they do not invest in equities, derivatives or any exotic financial products and so this ultimately reduces

Company: Vivier & Co Name: Luigi Wewege - CEO Email: info@vivierco.com Website: www.vivierco.com Telephone: +64 9 889 3989

Wealth & Finance | September 2016

BANKING 1609LB11

European Corporate Top 100

A Capital Markets Fellow

Based in Austria, Raiffeisen Centrobank AG is a leading specialist bank, covering the entire spectrum of services and products around equities and certificates. We are a subsidiary of Raiffeisen Bank International AG. and are focussing on our core regions in Austria and Central and Eastern Europe (CEE), also including Russia. Raiffeisen Centrobank AG covers approximately 130 equities in the CEE region, as well in Russia and Turkey.

There are a number of issues facing banking at the moment, Brexit being one of them. From my perspective, I was expecting a much deeper impact after 23rd June but I do think there is a growing need to establish confidence in the Euro again. I found the market reaction to be surprisingly soft, and was even more surprised at how the issue has been completely ignored in some respects. I feel that the market has not yet realised that it will weaken the Eurozone, and the fact is that there is still little knowledge about what will happen, and it can be difficult to judge what happens next.

n total, the company research universe of Raiffeisen Centrobank AG contains approximately 130 equities on the cash equity side, and we are the leader for structured financial products, particularly certificates, in our region. We are currently issuing up to 4,500 products, of which the majority are custom-made products for retail customers. These products range from 100% capital guaranteed to highly leveraged products. In terms of our history, Centrobank itself was founded in the 1970s, whereas the cash equity and certificates side of the bank began in 2002, when we were taken over by Raiffeisen.

In terms of how this impacts us, Raiffeisen Centrobank AGâ&#x20AC;&#x2122;s business model means that it will not have much of an effect. Of course, one of the most important markets for cash equity is London and I think this will continue to be the case, but if this changes we will simply follow our investors if they are willing to change their location. It is definitely not good for Europe, but having said that it is not something that directly impacts our business.

Raiffeisen Centrobank AG also focuses on trading, which does not mean proptrading in a common sense but pure market making. This is quite important for Raiffeisen Centrobank AG, because we can offer liquidity on all exchanges for equities and all the structured procuts we are issuing. Essentially, Raiffeisen Centrobank AG is a bank by definition and an equity house, which is quite rare today in Europe. The firmâ&#x20AC;&#x2122;s strong regional focus is on Central Eastern Europe, Austria and Russia. All the companies that we cover and many of the investors we are servicing are located in this region.

Looking ahead, there are many obstacles Raiffeisen Centrobank AG will need to overcome in order to continue to succeed. The main challenge facing us, are regulatory issues, which are impacting our business. This results in issues such as how portfolios are defined and which product is allowed to be sold.

As a result of having two separate business lines, Raiffeisen Centrobank AG has a highly diverse range of clients. On the cash equity side, we offer our research and corporate access to institutional clients only, as pension funds, insurance companies and portfolio managers. It is mainly institutional investors where we offer both research and corporate access. On the certificate side, this is focussed on retail private banking, mainly specialising on the network of banks we are located in across Europe.

Personally, I think the amount of new regulations needs to come to an end and should be executed in a proportional way, which keeps in the mind the size of the bank too. I believe that governments should view capital markets as something that can benefit them rather than a threat, and I also cannot stress enough the many benefits that it can bring.

Raiffeisen Centrobank AG works in a highly demanding industry, which is why we always hire staff who are highly motivated and are hungry for success for both themselves and the business. We are highly specialised, so we have staff that are dedicated to one specific area too. Due to our relatively small size, our staff have to take on a high level of responsibility in comparison to larger corporate banks, but I view this as a positive aspect which is certainly a highly motivating factor. Name: Wilhelm Celeda Company: Raiffeisen Centrobank AG Web: www.rcb.at/en/

Wealth & Finance | September 2016

Difficult Times Ahead for First-Time Buyers Many first-time buyers would have hoped that the prediction of Brexit leading to house prices falling would come to fruition, giving them a better chance of getting a foothold on the housing ladder. Unfortunately, the opposite could actually be occurring, as not only are first-time buyer (FTB) house prices rising, but availability of suitable mortgages is beginning to dip.

hat’s according to the AmTrust Moneyfacts Mortgage Loan to Value (LTV) Tracker, which shows that the average price paid by FTBs hit £161,912 in June, the highest seen so far this year. This could make it harder for typical FTBs to stump up a suitable deposit, an issue that’s compounded by the fact that it could now be harder to even find a suitable mortgage: the number of 95% LTV mortgages available (typical FTB products) has seen a definite slump, with availability having fallen in the two months since the referendum (down from 249 in June to 238 in August).

However, this could come as little consolation to those hit with the double whammy of price rises and a product shortage, since if they’re finding it harder to build a deposit and secure that vital mortgage, they simply won’t be able to benefit from lower rates. Concerns remain “The early indications are that Brexit has not prevented the upward march of house prices for first-time buyers, making high-LTV deals critical to those hoping to take their first step onto the house ladder,” said Simon Crone of AmTrust International.

FTBs lose out However, this isn’t the case elsewhere in the market. In fact, it’s quite the contrary; the 95% tier was the only LTV bracket to see a monthly drop in availability in August, while the number of available products for those with larger deposits has risen. This “suggests it is only those unable to save bigger sums of money that are feeling the effects of Brexit so far”, the report states, with FTBs bearing the brunt of the uncertainty.

He added that it was “concerning, but perhaps not surprising, to see the number of available products for those with small deposits going into decline”, with uncertainty in the market leading to a decline in lenders’ appetite for risk. Providers are becoming less willing to lend to borrowers at such high LTVs for the simple reason that these borrowers could be most impacted by any economic shocks, so they’re focusing on lending to those with greater deposits instead.

Indeed, high-LTV lending accounted for just 2.5% of all mortgage lending during the first three months of 2016, down from 3.0% the previous quarter and 3.5% a year ago. It’s also well below the peak market share of 4.2% recorded when the Help to Buy Mortgage Guarantee scheme was first introduced: the scheme kick-started lending to this sector of the market, but doesn’t appear to have maintained it at the same high level, with small deposit lending having declined notably since then.

“This suggests that Brexit may not be as good for first time buyers as initially thought,” concluded Simon. “Despite the lower interest rates available, house prices continue to rise and a lack of appetite for high LTV lending will take its toll on FTBs. Saving a large deposit remains the biggest obstacle to homeownership, made harder for hopeful buyers by high rental costs and stagnant incomes; high LTV lending is therefore invaluable to many first-time buyers and their dreams of home-ownership.”

Rate benefits In slightly better news for first-timers, mortgage rates have fallen to fresh lows, with the average rate for a 95% LTV mortgage down by 0.46% year-on-year to stand at 3.86%. In comparison, the average rate at 75% LTV fell by a lesser 0.15% on an annual basis to 1.72%; this means that the rate difference between the two has fallen to a record low of 2.14%, so FTBs won’t have to pay quite the premium that they once did.

Take action It may be slightly harder to take that first step on the ladder, but that doesn’t mean it’s impossible – as long as you’re prepared. The key is to start saving as much as you can into a dedicated savings account, perhaps an easy access version if you think you’ll need to get at your cash, or a regular savings alternative to really get you into the savings habit. Then it all comes down to finding the right mortgage to suit. Availability may be dipping, but there are still plenty of great deals out there, so check out the top first-time buyer mortgage deals to get started and see if you can make your dream of homeownership a reality.

Indeed, thanks to lower interest rates, calculations show that those with a 5% deposit can now save £40 a month compared to what they would have paid if they’d taken out an average FTB mortgage a year ago, which adds up to savings of more than £480 over the course of a year. Those with 10% deposits fare even better: the monthly payment on an average 90% LTV mortgage was £52 per month lower in July 2016 compared to 2015, equating to annual savings of £624.

Web Address: http://moneyfacts.co.uk/

Wealth & Finance | September 2016

MORTGAGES

A Month on from Base Rate - Mortgages Since the mortgage market had not experienced a base rate change for many years, it was always going to be difficult to predict how providers were going to react. Now, one month on from the reduction to the Bank of England base rate, Moneyfacts.co.uk assesses the impact the fall in rate has had on the mortgage market.

harlotte Nelson, finance expert at Moneyfacts.co.uk, said: “Whilst the picture for borrowers isn’t bleak, it is definitely a mixed bag. Borrowers would have assumed that a 0.25% cut in base rate would make them financially better off, particularly if they were on a variable rate. However, this is unfortunately not the case, with just under half of providers failing to pass this cut on to their Standard Variable Rate (SVR) customers.

“As rumours start to build about a second reduction to base rate and mortgages are falling to record lows yet again, borrowers and providers alike are questioning how low these deals will actually go.” *Based on a £200,000 mortgage over a 25-year term on a capital and interest repayment basis. Average Rates Standard Variable Rate (SVR) Two-year tracker Lifetime tracker Two-year fixed

“Given the bumpy road ahead for the economy, some providers are still quite cautious in their reaction to this new turn of events, with many choosing to wait and see to ensure they get the timing right. With fixed rates at all-time lows, borrowers sitting on their SVR would still be better off opting for a fixed rate. For example, borrowers would be £243.03* a month better off based on the average two-year fixed rate at 2.46% compared to the average SVR of 4.71%.

1st August 4.80% 2.13% 2.98% 2.48%

Source: Moneyfacts.co.uk Compiled: 1.9.16

“The average two-year tracker rate has been reduced by 0.19%, so borrowers looking for this type of deal would have seen a better picture. However, shockingly some providers, pre-empting the announcement, chose to increase their variable rate products, meaning the reductions have been offset. To illustrate this, at the start of July the average two-year variable tracker rate stood at 2.01%. This had increased by 0.12% on 1st August, therefore reducing the effect of the reduction in the month of August to 0.07% in real terms.

Web: http://moneyfacts.co.uk/

Today 4.71% 1.94% 2.74% 2.45%

Wealth & Finance | September 2016

MARKETS

Are the Capital Markets Headed for a Major Correction and Will Hedge Funds Help or Hurt Major corrections of the capital markets are a risk that investors always need to consider. The question is not if, but when will it happen. Investors need to consider: What is the probability of it happening in the near future? How big will the correction be? How long will it last? Am I prepared to ride it out, or is it game over if it happens?

market bubbles will end, but typically the longer they go on, the worse the final outcome.

ost investors are used to the capital markets rebounding fairly quickly from a market correction. However, the worst sell-off of the US stock market began in 1929 and resulted in a decline of almost 90% that took 23 years to recover. The Nikkei index hit an all-time high of approximately 39,000 in 1989 and more than 26 years later is still below half its peak.

Strong equity returns are being driven primarily from expansion of PE multiples in an environment of very low global GDP growth and stagnant earnings growth. Brexit, weakness in China’s economy and potential defaults by weaker countries within Europe are quickly shaken off. Investors justify these elevated equity prices based on the low interest rate environment, which has caused the correlation between the equity and fixed income markets to rise. The massive stimulus since 2008 by monetary authorities around the world has had less and less impact on global growth and leaves these organisations with very little dry powder to prevent a deeper and more prolonged recession than experienced in 2008. In addition, these dynamics increase the probability of a major market sell-off as central banks continue to artificially prop up markets.

Has the probability of a major sell-off increased? We have recently heard some of the top investors in the world give very negative comments on their outlook for the capital markets, including: Jeffrey Gundlach speaking with Business Insider said “The artist Christopher Wool has a word painting: ‘Sell the house, sell the car, sell the kids.’ That’s exactly how I feel – sell everything. Nothing here looks good.” Bill Gross stated on Twitter, “Global yields lowest in 500 years of recorded history. $10 trillion of negative rate bonds. This is a supernova that will explode one day.”

Are Investors prepared? Most institutional investors use modern portfolio theory to build ‘efficient portfolios’ that maximise forward expected risk-adjusted returns for a multi-asset class portfolio. In order to calculate the optimal asset allocation, they use assumptions for return, volatility and correlations (relative to movements of various asset classes) for each asset class in the model. Unfortunately, during market sell-offs these models break down. Not only does volatility spike, but more importantly, correlations between managers and asset classes are dynamic and rise significantly creating much more tail risk than perceived in investor’s portfolios. Most public pension funds are heavily under-funded and a prolonged sell-off in the capital markets would leave many unable to pay benefits without increased funding at a time when the municipality can least afford to make additional payments.

“The artist Christopher Wool has a word painting: ‘Sell the house, sell the car, sell the kids.’ That’s exactly how I feel – sell everything. Nothing here looks good.” Many people believe there is an unsustainable bubble in the fixed income markets. Not only have sovereign interest rates declined to record lows, but spreads have tightened as investors reach further and further for yield. Fitch Ratings estimates that as of mid-August, $13.4 trillion of bonds were trading at negative interest rates representing approximately a third of all outstanding global debt. Governments are issuing debt at negative interest rates while running up unsustainable deficits. This does not include unfunded liabilities for public welfare programs such as retirement and healthcare. Most experts agree these programs are unsustainable in the long term. It is difficult to predict when capital

Should investors hold more cash? Most investors are terrible at predicting the directions of the market and this strategy requires two decisions: when to get out and when to get back in. Investors typically get whipsawed by letting their emotions drive their investment decisions by buying near market peaks and exiting near market bottoms. A much better strategy is to build out a diversified portfolio

Wealth & Finance | September 2016

that can ride through market turbulence. This requires understanding and being comfortable with the tail risk of the portfolio and avoiding the need to sell at market bottoms.

if there is an impairment to credit. This gives them a very stable uncorrelated performance as long as the liquidity provisions of the fund match the underlying securities and there is not a significant impairment to the credit quality of the loan portfolio.

Can hedge funds help? Recently, the hedge fund industry has been heavily criticised for poor performance of hedge fund indices. 2016 has been one of the worst years ever for performance of hedge fund indices relative to the stock and bond markets, but it does not tell the whole story. Hedge Fund indices are biased to do poorly, because they consist of an amalgamation of investment strategies and a broad array of hedge fund managers. The hedge fund industry has low barriers to entry and as a result has swelled to over 15,000 managers, most of whom are not very good. It is similar to the mutual fund industry where a majority of funds underperform the indices they are expected to outperform.

Reinsurance This includes a lot of strategies with very different return expectations and tail risks. The main common feature of these funds are allocating to a portfolio of insurance policies where the primary drivers of return are insurance premiums minus claims. For those managers investing in a portfolio comprised of broadly diversified geographical exposure to property risk (earthquake, fire, hurricane, tornado), their returns will have very low correlation to the capital markets. Volatility Short volatility strategies, where you sell options and collect the premium have been described as picking up dimes in front of a steamroller. However, long volatility strategies can help diversify a portfolio because they tend to have low correlation to the capital markets and often do well during market selloffs as volatility spikes. These strategies trade options and futures contracts by identifying inefficiencies in how they are priced and capturing changes in volatility. More simply put, the value of an option is calculated based on a number of factors such as the strike price, how much time is left to expiration and the implied volatility of the underlying security. Volatility strategies take advantage of overvalued and undervalued implied volatility levels in stocks, bonds, commodities, and currencies.

“Many people believe the risk of a major market correction has increased and it is important for all investors to take this into consideration when building out their portfolios.” It is important to remember that hedge funds are not an asset class but a fund structure consisting of numerous investment strategies. The performance of hedge fund strategies and managers varies greatly along with their correlations relative to the capital markets. Successful investing in hedge funds requires analysing the strengths and weaknesses of each hedge fund strategy as well as the managers within each strategy. Some strategies have the potential to have low and possibly negative correlation to the fixed income and equity markets during a market sell-off. In addition, unlike holding cash yielding close to a zero percent interest rate, many hedge fund strategies have the potential to generate decent returns. Below are listed of some these diversifying strategies:

There are many other hedge fund strategies with low correlation to the capital markets we have not reviewed in this paper such as market neutral equity, relative value fixed income and global macro, all of which are worth analysing for similar reasons. Summary Many people believe the risk of a major market correction has increased and it is important for all investors to take this into consideration when building out their portfolios. The hedge fund industry has recently received heavy criticism, much of it is deserved. Stevie Wonder, on a recent episode of ‘Carpool Karaoke’ commented that, “all English people look alike.” He was obviously kidding, but it is also true for the hedge fund industry. The average hedge fund might not be very good, however there are a number of highly skilled managers and strategies that can provide valuable diversification to a portfolio. In addition, with fixed income rates so low, many hedge fund strategies have the potential to not only reduce risk, but also enhance returns.

Commodity Trading Advisors (CTAs) These includes a lot of different strategies, but are dominated by systematic trend following managers that identify price trends across multiple asset classes, including currencies, commodities, equities and fixed income. Trend following has been one of the top performing strategies over the past few years and has worked well over long periods of time including up double digits in 2008. A pure trend follower does not care about fundamental analysis or valuations of markets. Their correlation to the capital markets on average is very low, however many have dynamic correlations that are positive in up markets and negative in down markets. Investors should consider building out a diversified portfolio of CTA’s consisting of many different trend following and non-trend following strategies. Private Lending There are wide differences in credit quality and yields of funds within the private lending space, but most of these funds are taking advantage of the fact that it is difficult for small and mid-sized companies to get financing from traditional lenders. As a result, yields are much higher typically for private debt than traditional marketable fixed income securities. Many of these funds hold their securities at book and only adjust market value

Web Address: www.agecroftpartners.com

Wealth & Finance | September 2016

New Survey Reveals That a Wave of IPOs Could Hit Global Markets Within the next 12 Months Corporates looking to go public should get ready for the initial public offering (IPO) window to open soon, according to a new report. The study of senior executives, Taking Stock: Going Public in Volatile Times, by global law firm Reed Smith - in partnership with Mergermarket- found that more than half (58%) expect the IPO window to re-open in the next 12 months, while a further 38% suggest it will happen in the next 24 months.

“T

top three. Short-termism, shareholder pressure and the risk of litigation also ranked high in the list of reservations about being a publicly listed company.

he appetite for IPOs has dulled considerably over the last year,” says Nick Cheek, global managing editor at Remark, the publishing and events division of Mergermarket Group. “Global IPO volume fell by 38% from a H1 2015 total of 544 to just 339 in H1 2016.”

“The reasons for decline have been well documented including uncertainty surrounding the outcomes of both the 2016 US election the UK’s EU referendumwhere the leave result has only succeeded in ratcheting up the volatility.”

Cheek adds: “The reasons for decline have been well documented including uncertainty surrounding the outcomes of both the 2016 US election the UK’s EU referendumwhere the leave result has only succeeded in ratcheting up the volatility. Yet despite the uncertainty, the results of our survey suggest that companies globally are optimistic about the future direction of activity.” The report assesses the current volatility in the capital markets, how companies are preparing themselves to launch IPOs when markets become receptive to new issues, and the post-IPO challenges companies face.

Taking stock: going public in volatile times Taking stock: Going public in volatile times is the third in a series of four reports in Reed Smith’s Deal Dimensions series. For the report, Mergermarket surveyed 100 respondents (CEOs, CFOs and heads of strategy) employed by privately held companies across Asia-Pacific, North America and Europe. All 100 companies were considering an IPO within the next three years.

James Wilkinson, Reed Smith corporate partner, London, comments: “Our survey shows that many companies are in the process of taking the necessary steps to prepare for an IPO. These steps include ensuring that financial reporting is GAAP or IFRS compliant; that their corporate governance practices are more attuned to the requirements of the public markets; and that they have shown sold quarter-on-quarter growth or have otherwise developed a compelling value proposition when the time comes to launch. There is a backlog of companies that are waiting on the sidelines for the right opportunity.”

For more information, visit: www.reedsmith.com www.mergermarket.com

When it comes to post-IPO challenges, 59% of respondents cited greater public scrutiny among their top three reservations, while 51% said concern about their stock being subject to market volatility ranked in

MARKETS

Venture Capital Fund Managers See Growing Appetite Preqin’s latest survey of 143 venture capital fund managers found that institutional investor appetite for exposure to the asset class has increased across all regions, with the largest increase seen among investors based in Asia. 62% of firms polled stated that they were seeing greater appetite for venture capital from investors in the region compared with a year ago, well above the proportion of investors in other regions. At the same time, just 9% believe that appetite from Asia-based investors has declined in the past 12 months, the lowest proportion seen in any region.

capital. Given that the venture capital industry has seen rapid increases in activity in Asia over recent years, it may be that managers active in the region will need to look beyond the traditional strongholds of Greater China and India in order to find attractive investment opportunities.”

n other regions the growth is more equivocal, although the general trend is towards greater appetite for the asset class. Nearly a fifth (18%) of managers surveyed stated that investor appetite for venture capital has decreased from investors located in North America, the largest market for the asset class, although 38% of firms did say that appetite had increased. At the same time, 23% and 21% of managers reported increased appetite from investors in the emerging markets of Sub-Saharan Africa and Latin America respectively, only marginally above the 13% of firms which have seen less appetite from these regions.

Other Key Venture Capital Fund Manager outlook facts include: - New Funds: 23% of venture capital fund managers currently have a fund on the road, while a further 43% plan to bring a new fund to market in the next 12 months. Although 13% were unsure of the timing of their next fund, 5% of managers surveyed said they do not plan to bring a new fund to market. - Social Impact: The majority of fund managers (51%) include social impact considerations for either all (18%) or some (33%) of their prospective investments. Nearly a third of firms (31%) never consider social impact factors, while 18% do not currently but suggested that they might in the future. - Deal-Making Market: The largest proportion of managers (42%) said that the level of competition for deals was similar to last year. However, 40% of managers have faced increased competition for deal exposure in the past year, and 53% are reviewing more investment opportunities than 12 months ago. - Fundraising Environment: As new venture capital funds continue to come to market, the majority (70%) of managers have seen an increase in competition for investor capital, including 20% that believe there is significantly more competition than 12 months ago. Only 6% of firms believe there is now less competition. - Biggest Challenges: The exit environment was cited as the biggest challenge facing the venture capital industry over the next 12 months by 55% of firms. Fundraising (37%), followed by volatility and uncertainty in global markets (31%), were the next most prevalent concerns among respondents.

Felice Egidio, Preqin’s head of venture capital products commented: “The venture capital industry continues to attract investors across the world as the asset class matures and develops. Asia, in particular, has seen rapid growth over the past few years and now rivals fundraising in Europe and North America. This trend looks set to continue, with the greatest proportion of fund managers seeing increased appetite from Asia-based investors.

“Although managers are concerned about the exit environment and the rising price of company valuations, a large proportion are either currently raising new funds, or intend to within the next year.” “Although managers are concerned about the exit environment and the rising price of company valuations, a large proportion are either currently raising new funds, or intend to within the next year. This could lead to increases in dry powder and the total AUM of the asset class, if managers are not able to exit their investments at the same rate as they accrue fresh

To access further information and analysis, please see the full report below: https://www.preqin.com/docs/newsletters/pe/Preqin-Private-Equity-Spotlight-September-2016.pdf

Wealth & Finance | September 2016

Brexit Changes to EU VAT Will Substantially Affect Businesses Tax professionals already anticipate an expected onslaught of VAT changes resulting from the United Kingdom’s exiting the European Union, according to a recent poll by Avalara EMEA, a leading provider of cloud-based tax compliance automation for businesses of all sizes. 51% project increased complexity in VAT compliance, and paying more in VAT and customs (68%). While 53% of those polled expect substantial impact on their businesses, more than half have not yet begun planning for Brexit at all (54%).

ichard Asquith, VP of global indirect tax, Avalara EMEA said: “Now more than ever, VAT automation becomes key to ensure businesses are prepared for the new requirements of Brexit. While the timing remains uncertain, businesses can start to prepare now by ensuring they are set up with the right technology. VAT automation platforms ensure organisations remain compliant with regulations and do not suffer the burden of huge losses in the midst of navigating a new trade environment. Updating systems now can ensure a seamless transition once Brexit arrives.”

free trade with the EU, although it would lose the right to have a veto or vote over any EU laws passed that are imposed on EEA members. The EEA does not cover indirect tax, so the UK would remain outside of the EU VAT regime. • Freedom to set UK VAT rates - The UK will no longer be constrained by the EU VAT Directive on setting its VAT rates. The UK will therefore be uninhibited to change reduced VAT rates on key products like domestic fuel, women’s sanitary products and e-books.

“Now more than ever, VAT automation becomes key to ensure businesses are prepared for the new requirements of Brexit. While the timing remains uncertain, businesses can start to prepare now by ensuring they are set up with the right technology.”

The poll also uncovered the following findings: • 49% predict Brexit will happen by the end of 2020, a ‘soft exit’; • Half anticipate the UK will adopt a Canadian trade model (World Trade Organization/Free Trade Agreement); • Poll respondents believe that the highest risks Brexit will bring for the industry include: 1. 63% - Preparedness of HM Revenue & Customs; 2. 55% - Increases in customs and other border costs and; 3. 45% - Adapting internal enterprise resource planning (ERP) systems. EU VAT Implications Avalara anticipates many areas of shared VAT practices will be reviewed and revised as Brexit negotiations take place. Some of those include the following: • Legislation - Upon completion of the exit negotiations, the UK will no longer be required to follow the EU VAT Directive or European Court of Justice (ECJ) rulings. Instead, the UK’s VAT Act will take supremacy. The UK government will be free to amend the Act to reflect its fiscal policy objectives. • Exit from the single market - The major VAT change for UK companies following Brexit will be the loss of their intra-community trading status. Instead of zero-rating B2B sales to EU companies, transactions will be treated as imports into the EU, and subject to EU VAT. • UK to join the EEA? - It is possible that the UK could become a member of the European Economic Area, which participates in the Single Market encompassing the free movement of goods, services, people and capital. This would give the UK many of the benefits of

• EU VAT recovery - UK companies will lose the right to use the simplified 8th Directive online VAT recovery system for their EU VAT reclaims. Instead, since they will be non-EU companies, they will have to resort to the paper-based 13th Directive regime. This is slower, and prone to challenges from the tax authorities. For more information on Avalara and ongoing news on Brexit and the tax industry, please visit www.vatlive.com More information at: www.avalara.co.uk

Wealth & Finance | September 2016

TAX

Wealth & Finance | September 2016

TAX

Naming and Shaming Multinationals Is Not the Answer Following the UK’s recent amendment to the finance bill, to include enabling legislation that would require companies to publish a ‘country-by-country report’, showing where they paid their taxes and earned their revenues, is nothing more than an ineffectual naming and shaming exercise.

•

If countries do adopt CbCR, what purpose does it serve? It would show that countries like Luxembourg and Ireland aren’t interested in Corporation Tax - they want bums on seats; they want jobs that produce income, that generates income tax receipts, and that gives rise to consumption, thus producing VAT receipts. This begs the question: is Corporation Tax necessary? Is it the solution, or is there an alternative? Maybe Ireland and Luxembourg are ahead of the curve on this one.

• What gets missed in all of this brouhaha is the fact that whatever tax is suffered by a multinational enterprise (MNE) is ultimately passed on to the consumer: Vodafone, Starbucks, Amazon, Boots, Shell, Apple and so on, would simply increase the price of their product to protect their bottom line. • The UK and other countries can bleat about how unfair it is that Ireland and Luxembourg are gaming the system, but HMRC could have policed its treaty network better, including invoking anti-abuse provisions in its treaties (Limitation on Benefits). • The expectations of the likes of Flint will never be met – to suggest a domestic company is the same as a MNE is Alice in Wonderland stuff – either genuinely stupid or wilfully blind. MNE’s are hugely complex enterprises and, like it or not, have the ability to locate operations, risks, staff, manufacturing, etc. wherever they like and wherever they can get the best deal. Period. That’s life and that’s choice. What the campaigners really want is to remove choice.

Company: Milestone International Tax Name: Miles Dean, Managing Partner Email: miles@milestonetax.com Web: www.milestonetax.com

Wealth & Finance | September 2016

Apple Corporation Tax Ruling Following news that the European Commission deemed Apple’s Irish tax benefits to be illegal, ordering the American firm to repay £11 billion in taxes, new research from FreeAgent, reveals that 71% of SMEs feel big businesses benefit from the tax system more than smaller companies.

d Molyneux, CEO and co-founder of FreeAgent - who provide multi-award winning cloud accounting software for freelancers, micro-businesses and their accountants - said: “The European Commission’s decision will be welcome news for freelancers and micro-businesses - many of whom feel that they are getting a raw deal when it comes to paying tax.”

“We know that corporation tax is often a stumbling block for micro-business owners to deal with, especially when they change from being a sole trader to a limited company. It can be a very confusing tax to understand and many of them have to work very hard to calculate the correct amount to pay - with the shadow of the tax man looming if they get things wrong.” “I’m sure many micro-business owners will therefore be happy to see a major multinational company being made to pay their fair share.”

“We recently carried out research that found seven in ten (71%) UK micro-business owners in the UK felt that larger businesses benefited more from the tax system than they did. Projected across the UK’s 5.2 million-strong micro-businesses sector, which accounts for 95% of all businesses, that equates to millions of self-employed people who view the tax system with a sense of injustice.”

All figures, unless otherwise stated, are from FreeAgent. Total sample size was 513 owners of UK micro-businesses with fewer than 10 employees. The survey was carried out online between 17th June to 25th July 2016.

Web: www.freeagent.com

Laura Hutton / Shutterstock.com

TAX

Avalara EMEA Summit Explores Future of VAT Automation Avalara EMEA, a leading provider of cloud-based transactional tax compliance automation for businesses of all sizes, recently held its second annual VAT Automation Summit, sponsored by Brewer Morris. The summit brings together leading indirect tax professionals to discuss topics affecting the industry, including EU VAT fraud and the future of tax compliance automation.

central theme of the summit is focused on the need for businesses to adopt tax automation solutions to combat fraud and ensure greater compliance. This topic is timely, due to recent news released by the European Commission regarding the ‘VAT Gap’, or the staggering €160 billion in lost EU VAT revenues in 2014.

lies in blockchain technology. This public ledger system records and validates each and every transaction. Entries are registered and cryptographically sealed, making them nearly impossible to falsify or destroy. “Blockchain technology has massive implications for tax professionals,” said Kid Misso, senior director of solution consulting, Avalara EMEA. “The fact that it is a validated agreement between two or more parties means it cannot be repudiated or invalidated. The indelibility, speed, and synchronization of this technology can lead to greater accuracy and transparency, helping to reduce the likelihood of fraud in the future.”

“Moving to real-time tax reporting will help to increase transparency in the VAT system and can prepare businesses for tax authorities’ demands for more, live data,” said summit speaker Richard Asquith, vice president of global indirect tax, Avalara EMEA. “VAT automation systems are a valuable solution for managing complex VAT processes, such as cross-border sales for businesses trading in countries with different regimes or regulatory requirements.”

For more information on Avalara and video from the 2016 VAT Automation Summit, please visit www.vatlive.com and also, www.avalara.co.uk

In addition to the EU VAT Gap, the summit is addressing major developments shaping domestic and international trade, including the UK’s initiative to streamline the tax reporting process through its 2020 ‘Making Tax Digital’ initiative. Through this new system, HM Revenue & Customs aims to eliminate the tax return over the next five years. Instead, businesses will be required to track tax compliance digitally and update HMRC at least quarterly via a digital account. The goal of this proposal is to create a more efficient tax reporting process; with further regulatory change on the horizon, such as Brexit, its implementation is paramount. Across the globe, countries such as China, India, Egypt and the Gulf Cooperation Council (GCC) states, are placing increased emphasis on VAT collections or introducing new regimes. These new systems lead to further changes in international VAT requirements, and thus further complexity. New regulations and the need to mitigate fraud present a prime opportunity for tax automation services that help businesses to comply with country VAT rates and eliminate errors which are costing firms millions in tax penalties. Blockchain technology While VAT automation services offer a more immediate solution to address these recent trends, a longer term opportunity for accountants

Wealth & Finance | September 2016

What will the UKâ&#x20AC;&#x2122;s post-Brexit Landscape mean for M&A? 78

LEGAL & REGULATION

Uncertainty percolated through to the M&A market in advance of the EU referendum vote, with activity value in the UK dropping 51% on-quarter in the April-June period, from $38.9bn to $19.3bn. In the short amount of time post the vote, activity value has been recovering steadily with Thomson Reuters data showing that since 23 June, almost 60 transactions totalling $34.5 billion have been struck by foreign companies for British firms, compared with 79 deals amounting to $4.3 billion in the month leading up to the vote.

Until a decision is made about the UK’s post-Brexit relationship, we will not know the full extent to which existing laws can and will be amended or repealed. In the meantime, those undertaking M&A activity should also bear the following additional points in mind: • The structure and execution of UK private M&A transactions should not to be materially impacted as EU-derived legislation plays little part in the laws governing such transactions. • For public company acquisitions there are unlikely to be substantial changes to the UK Takeover Code. The Code is a universally accepted and respected regime which pre-dates the EU Takeover Directive and influenced the approach taken in the Directive. • The nature of intellectual property rights will be affected along with the ability to enforce them. National rights will remain unaffected, but Community Trade Marks and Community Design Rights may cease to apply to the UK. • The UK data protection laws are derived from the EU regime. If the UK government elects to stay out of the EEA it has the option to amend the current legislation. However, the UK will want to ensure that it has a regime that is regarded as ‘acceptable’ by the remaining EU countries. • The impact of certain EU-derived employment regulations on labour relations, for example the Working Time Regulations, may be affected over time if the UK adopts a more laissez faire approach to the employment relationship.

hese figures are, no doubt, as a result of overseas buyers looking to take advantage of the weak pound, so many UK companies may still be taking stock and considering their options. Despite the short-term impact though, one of the interesting questions will be how Britain’s yet-to-be-decided post-Brexit relationship will impact M&A activity in the long-term.

From a legal perspective, nothing has yet changed. The UK remains a full member of the EU with continued access to the single market – meaning that, for the moment, the legal status quo continues. While we wait to hear the result of negotiations as to the post-Brexit landscape, it should be remembered that each of the commonly discussed models will have their own particular impact on UK M&A: 1. The ‘Norwegian model’ would see the UK leave the EU and join the European Economic Area (EEA) and European Free Trade Association (EFTA), accepting the principles of free movement of goods, services, capital and people in exchange for access to the single market. In terms of change, this is possibly the lightest touch, meaning a minimal impact. For example, the EU Takeover Directive and the EU Merger Regulations, which provide a single competition clearance process across the EU, will both continue to apply. 2. The ‘Swiss model’ would see the UK leave the EU and join EFTA, but not the EEA. As a result, the UK government would need to negotiate a series of bilateral agreements with the EU to secure access to the single market.

Those decisions affecting the UK’s future are very much out of the hands of those at the coal-face of the M&A market. The bottom line is that in order to maintain the UK’s strong position, there will be an onus on the government and its dedicated Brexit team to ensure that the UK remains an attractive place for businesses to operate and to trade with the EU. For now, though, the long term implications are very much a case of ‘wait and see’.

This model presents greater uncertainty, given that the UK would have the flexibility to change its laws and move away from EU regulations. In this scenario, companies contemplating, or engaged in, M&A activity will need to be nimble to react to the changing regulatory framework around M&A and also those areas of law that impact on the running of UK businesses, such as tax, employment, intellectual property and data protection. 3. Total exit from the EU and the single market would mean the either relying on the rules of the World Trade Organisation to continue trading with the EU, or seeking to negotiate a new free trade agreement. In a total exit scenario, the issues facing the UK M&A market would be very similar to those under the Swiss model. Acquisitive companies would therefore need to position themselves to react to the changes that would follow.

Company: Pillsbury Winthrop Shaw Pittman LLP Name: Sam Pearse, Partner Email: samuel.pearse@pillsburylaw.com Web Address: www.pillsburylaw.com Address: Tower 42, Level 21 25 Old Broad Street London, EC2N 1HQ Telephone: +44 (0)20 7847 9597

When determining the way forward, the government will, of course, consider the likely effect of each model on the UK economy. So if the UK does leave the EU, but does not join the EEA, the temptation to cut red tape must be weighed against the potential impact on UK businesses trading or operating in the EU.

Wealth & Finance | September 2016

LEGAL & REGULATION

Intellectual Property Minister Encourages Further IP Collaboration Between UK and China On 8th September, Baroness Neville-Rolfe, the UK’s Minister of State for Energy and Intellectual Property returned from China after leading a successful IP delegation. The ministerial visit aimed to reinforce the strength of UK-China collaboration on IP, and to highlight the important role it plays in supporting innovation and creativity in both countries.

he trip, which between 20th and 27th August 2016, took the delegation to Hong Kong, Shenzhen, Guangzhou, Xi’an and Beijing, and saw Baroness Neville-Rolfe witness a number of landmark agreements and new initiatives. The highlights included: The witnessing of an agreement on IP protection between internet giant Tencent, the China Britain Business Council and British Businesses; The launch of a new UK-China Film and TV toolkit, designed to provide guidance for the rapidly growing cross border collaborations the publication of business guidance on bad-faith trade marks in China, a resource which will support businesses to better understand the Chinese IP landscape; The launch of a factsheet to support Chinese companies with overseas IP protection and technology commercialisation, created in conjunction with CIPA and ITMA; The co-hosting of both the 3rd UK-China IP Symposium and the UK-China Trade Mark Summit focussing on the relationship between brands, Intellectual Property and economic growth.

Baroness Neville-Rolfe, UK Minister of State for Energy and Intellectual Property, said: “It is very encouraging to see the momentous strides China is taking in the field of intellectual property. I am pleased that the UK is playing a vital advisory role and the UK’s IP regime is one that other nations wish to emulate.

The Minister held meetings with a wide range of Chinese companies including Tencent, Huawei, Alibaba, and Lenovo to discuss the increasing importance of IP and brand protection, as well as British businesses operating in China who have received support through the UK IPO Attaché network including BP, the Scotch Whisky Association and Whittards of Chelsea.

“It was excellent to meet the China Trade Mark Association in Beijing and ITMA is now looking forward to receiving a delegation of Chinese Trade Mark Attorneys in London, to continue the mutual collaboration on the different understandings of Trade Mark registration, opposition, and enforcement processes.”

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“The IPO-SIPO (vii) relationship has gone from strength-to-strength. The engagement throughout the visit has been excellent, demonstrating the strength of our relationship with China. IP cooperation is a central part of the UK-China bilateral relationship, underpinning our mutual passion for innovation and creativity.” Catherine Wolfe – former president of the Institute of Trade Mark Attorneys added: “ITMA, CIPA and ACID were delighted to accompany Baroness Neville-Rolfe on her visit to China. We visited Chinese patent and Trade Mark attorneys in four cities in five days to discuss Trade Marks, patents and designs in the UK and the EU and to grow our mutual understanding of IP registration and enforcement processes in China and in the UK countries. We are already looking forward to the next Symposium!

Dids Macdonald, OBE, CEO of anti-copying in design (ACID) & Vice Chair of the Alliance for Intellectual Property commented: “Joining the delegation in Hong Kong, Shenzhen and Beijing on the 20th anniversary of UK Intellectual Property Office cooperation with China’s State Intellectual Property Office demonstrated just how important it is to share best practice. Ensuring that there is consistency and continuity through bilateral collaboration and international networks reinforces the importance of IP globally. I was particularly encouraged to see Designs recognised and acknowledged for their contribution to brands and their economic growth.”

The Minister’s delegation included representatives from the UK Chartered Institute of Patent Attorneys (CIPA) and the Institute of Trade Mark Attorneys (ITMA), British businesses and also the Presiding Judge of the UK Intellectual Property Enterprise Court, Richard Hacon (for the fifth annual UK-China IP judicial exchange), strengthening a wider focus on rule of law and enforcement. Judge Hacon met senior judges at the Supreme People’s Court and specialist IP courts in Guangzhou and Beijing, and discussed priority topics such as bad-faith trademarks, copyright licensing and evidence disclosure.

Web Address: www.gov.uk

Wealth & Finance | September 2016

LEGAL & REGULATION

Standing at the Brexit Crossroads – Considerations for Pharma Companies Following the June EU referendum in the UK, pharmaceutical businesses around the world are assessing what impact Brexit may have on their operations and business relationships in the UK, the EU, and internationally.

he most obvious issue affecting pharmaceutical businesses, post-Brexit, is what will happen to existing and future marketing authorisations in the UK and the EU, but other important considerations include the potential impact of Brexit on data exclusivity periods, orphan products, supplementary protection certificates (SPCs), and clinical trials. This article looks at some of the key issues facing the pharmaceutical industry and identifies the key areas which need to be addressed as the UK progresses towards Brexit.

• Undergo new good manufacturing practice (GMP) inspections for their manufacturing sites in the UK

EU legislation and Brexit models Much of the legislation and regulation governing the sale of medicines in the UK at present comes from the EU (either as Directives, which have been implemented into national laws, or Regulations which are directly effective in all EU Member States and therefore do not require domestic implementation). In many cases where the UK decides to continue to implement EU legislation post-Brexit, it will need to agree with the EU some form of mutual recognition or equivalence regime in order to continue to be given access to rights set out in the EU legislation and for the EU to continue to recognise UK regulatory decisions.

Activities performed in all clinical trials (and health technology assessments (HTAs) were exempted from patent infringement in the UK by the amendment of the UK’s ‘Bolar’ provision in 2014. Since this provision is fully implemented into UK law (and heavily consulted on recently), the authors would not expect further changes to it, given the importance of being able to attract clinical trials to the UK.

Clinical trials The Clinical Trials Regulation, which entered into force on 16 June 2014, is expected to apply across the EU before Brexit takes effect. The UK will need to decide whether to implement equivalent legislation in the UK post-Brexit. It would also need an agreement with the EU to continue to fully benefit from new Regulations, such as the multi-centre approval process.

Businesses will also need to consider the wider validity of clinical trial data generated in the UK, post-Brexit, and analyse the use of, and ability to transfer, personal data to the UK which has been obtained through clinical trials in the EU.

Various models of Brexit have been proposed - from ‘Brexit-lite’ in which the UK remains part of the single market (either via the EEA or otherwise) and retains legal provisions derived from relevant EU Regulations and Directives, all the way to a total separation, which would require significant repatriation of EU laws or alternatively the drafting of new national UK provisions.

Data/market exclusivity The period of data/market exclusivity which applies once a new product has been authorised (the ‘8+2+1 rule’) derives from EU law and has been implemented in UK law. It seems likely that the UK will continue to protect developers of innovative medicines in this way, as part of ensuring the UK remains equally as attractive as the remaining EU Member States. The UK may even see this as an opportunity to set itself apart from the rest of the EU by providing longer protection for innovators.

Dealing with existing and future approvals Depending on the terms of the UK’s withdrawal from the EU, Brexit may require companies to:

However, this would need to be balanced against the NHS’s need to reduce the overall drug spend (which relies in part on generic entrants following the expiry of data/market exclusivity). UK legislators may also adopt a nuanced approach on issues such as exclusivity periods for new combinations, or indications, which may, in time, diverge from the EU’s approach.

•

Transfer existing marketing authorisations (MAs) which rely on an establishment in the UK to an entity established in another EU Member State (whether to a new establishment of the same company, a group company, or a third party); • Change their approach to MA filings for new products that will be launched in the UK and the rest of the EU (including considering the impact of Brexit on M&A deal structures where the transfer of MAs is required) and;

Wealth & Finance | September 2016

Specific EU legislation also applies to orphan drugs, which is designed to stimulate research and development of medicinal products for rare diseases only affecting a small percentage of the population (no more than 5 in 10,000 people within the EU). This orphan market exclusivity applies by virtue of a Regulation and the UK would need to actively ‘opt-in’ to reflect this legislation in national law, post-Brexit. Such an ‘opt-in’ would indicate the UK’s commitment to rewarding research into rare diseases. SPCs Like orphan market exclusivity, supplementary protection certificates (SPCs) exist by virtue of an EU Regulation. Carrying a maximum of five years’ additional exclusivity at the end of the life of the basic patent, SPCs are considered to be hugely important by innovator companies, but equally are subject to frequent challenges from the generics industry who can access the market earlier if the SPC on a product can be knocked out.

“The UK may even see this as an opportunity to set itself apart from the rest of the EU by providing longer protection for innovators.” SPCs compensate the originator for the R&D time involved in getting a new drug to market, which take up a significant amount of the ordinary 20 years’ patent monopoly period. If the UK wishes to maintain its commitment to rewarding pharmaceutical research and innovation, it is to be expected that a parallel SPC system would be retained. However, this is not a foregone conclusion and innovators should ensure that their government affairs teams are fully apprised of the significance of SPCs to their business. Assuming that UK SPCs continue in parallel to the EU system, will the numerous existing European Court (CJEU) decisions in this heavily litigated area continue to apply? Whilst those references from the UK are embedded in the national case law, the fate of references from other countries, and pending references is unclear. We envisage that, until the national courts diverge, they will see the existing CJEU cases as of useful (but not precedential) value. This undoubtedly provides an opportunity for the UK courts to impose some clarity on an area where the CJEU has at times generated confusion.

Company: Hogan Lovells Name: Elisabeth ann Wright Email: ea.wright@hoganlovells.com Web: www.hoganlovells.com Telephone: +32 2 505 09 11

The path forward… Whilst the UK’s preferred Brexit model remains unknown (and Article 50 has not been triggered) a definitive assessment of the impact on the pharmaceutical industry is, as in many other industries, unclear. However, whilst the status quo prevails, businesses can prepare by ensuring that their key areas of interest are raised with the UK government. Whilst divergence from Europe in many areas (such as clinical trials) is not desirable due to the international nature of the pharmaceutical industry, Brexit may provide the opportunity to simplify other areas, in particular around SPCs, and the provision for additional data exclusivity periods. Even if, ultimately, the outcome of Brexit is a re-negotiated EU membership or an EEA arrangement (Brexit-lite), increased engagement with government stakeholders can only improve the relationship between the pharma industry and those who regulate it.

Wealth & Finance | September 2016

European Corporate Top 100 - Romania

First Choice for Legal Assistance in Romania

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Gheorghe Mușat founded Mușat & Asociații in the early 1990s as one of the first law firms in Romania, after the fall of the communist regime. Acting in an emerging market and having as clients French, German, Italian, U.K. or U.S. corporations looking for business opportunities, Mușat & Asociații rapidly became one of the investors’ ‘first choice’ for legal assistance in Romania.

igh profile international companies such as Societe Generale, Rhone-Poulenc (currently Sanofi Avensis), Cement Francais, Renault, Bouygues, AT&T, American International Group (A.I.G.), SHELL and British Petroleum chose to work with Mușat & Asociații since its founding in 1990.

In addition, Mușat & Asociații legal teams have been praised many times by important foreign publishers for their noted expertise. In 2015, Mușat lawyers won the ‘Law Firm of the Year in Romania’ award, a distinction handed out annually by the reputed British publisher ‘The Lawyer’ to European law firms with outstanding achievements in the reference year. In 2013, the firm won the ‘The Law Firm of the Year in Romania’ award granted by the International Financial Law Review. That was the second time that Mușat & Asociații was granted this prestigious award, after the distinction received in 2011, when Romania was included for the first time on the list of countries nominated for the International Financial Law Review (IFLR) awards.

The start of the privatisations era to strategic investors launched by the Romanian government in 1995, provided the opportunity for Mușat & Asociații to enlarge its portfolio of foreign clients, which represents over 80% of the firm’s client base. During its 25 years of activity, Mușat & Asociații has become one of the most reputable names among law firms in Romania, positioning itself as a genuine market leader. The firm has been at the forefront of the country’s legal and business development, launching new areas of practice, and acting as a pioneer in the field, while constantly developing value added, tailor–made legal services, aimed at enabling client business in a legally sound environment. The firm is also renowned for anticipating the evolving needs of its clients, providing ground breaking work, and being involved in the biggest transactions on the local market.

Moreover, in 2012, Musat & Asociatii won the Gold Award for the ‘Best Law Firm in Central and Eastern Europe’, an accolade awarded by the 2012 International Legal Alliance Summit & Awards, for excellent results obtained on the Romanian market by the Musat & Asociatii team, both with regard to the mandates portfolio in the mergers & acquisitions area of practice, and to the management strategy adopted. Furthermore, the renowned publication Chambers Europe awarded the ‘Romanian Law Firm of the Year’ trophy to Musat & Asociatii, the law firm with the best performance in Romania, during the ‘Chambers Europe Awards for Excellence 2011’ gala.

Mușat & Asociații has an impressive portfolio of mandates, and offers support in all areas of business law, including mergers & acquisitions, privatisation, litigation & commercial arbitrations, banking & finance, energy & natural resources, IP & competition, corporate law, telecommunications & IT, labour, fiscal, capital markets, real estate, environmental law, PPP, healthcare & pharma, insolvency & restructuring, shipping and aviation as well as insurance.

Mușat & Asociații has 16 partners and more than 100 associate lawyers – the team being one of the largest on the Romanian market. Mușat partners have been with the company for several years, which ensures stability and cohesion within the team, but we are also recruiting new talent each year.

The firm regularly provides legal services to many of the most renowned and valued corporations in Romania, and worldwide, including a third of the Top 100 and half of the Top 500 largest companies, as well as to local public and financial institutions in intricate corporate and financial transactions and complex dispute resolution procedures.

The core management structure has remained intact in recent years, and this gives consistency to the business model and ensures the sustainability of our development and performance plan.

The firm’s portfolio comprises over 2,500 clients, most of which are international corporations, such as (to name few of them): Enel SpA, GDF Suez, Colas, European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD), RBS (Royal Bank of Scotland), ING Real Estate – ING Bank, Fortis Bank, KBC Bank, Raiffeisen Bank, Banca Transilvania, BNP Paribas, China Development Bank, OTP Bank, Eli Lilly, GlaxoSmithKline, Novartis, Roche, Abbott, General Electric, American International Group (AIG), General Electric, General Motors, Orange, Microsoft, Intel, Oracle, Google, Apple, AON, Amazon.com, AT&T, Nokia, Alcatel – Lucent, Telecom Italia, Thyssen Krupp, Generali, AFI Europe, Electrolux, Caterpillar, Monsanto, Deutsche Bahn, SAB Miller, Credit Suisse – Zurich, Credit Suisse Agricole, Grupo Lar, TNT Romania, Siemens, Daimler A.G., Generali Immobilien AG, GE Capital, Servier Pharma, Tigranit and so on.

Company: Mușat & Asociații Name: Gheorghe Mușat / Mona Mușat Email: musat@musat.ro; mona.musat@musat.ro Web Address: www.musat.ro Address: 43 Aviatorilor Boulevard, 1st District, Code 011853, Bucharest, ROMANIA Telephone: (40-21) 202.59.00; (40-31) 423.29.00

Wealth & Finance | September 2016

LEGAL & REGULATION 1609MS02

2016 Fund & Asset Specialist Awards

Inspiring Customers to Celebrate Living

Located in Bangkok, with over 70 branches all across the nation, FWD Life Insurance Plc. is a leading life insurer in Thailand, a subsidiary of Pacific Century Group (PCG), Hong Kong. FWD Life Insurance has been operating life insurance and financial provider business, focusing on user-friendly technology initiatives to improve service standards and develop an innovative range of products to serve the ever-changing needs of customers at all stages of life.

Apart from the product solution, we are proactively looking to make our customers’ lives more convenient using digital capabilities such as ‘FWD Smart’; an application that allow customers to apply insurance through sales agent’s tablet and submit online, Financial-need Analysis tool; in which we are developing as a sales tool to enable sales agents to understand customers’ need and offer the right product, and LINE Business Connect; latest innovation that allow customers and sales agents to have a personalized one-to-one conversation with us.

WD Life Insurance also provide modern technologies using digital and innovative service solutions for our customers. With over 500 experienced members of staff, almost 5,000 professional life insurance agency forces, 70 branches and agency offices nationwide, we have the personnel to solve your life insurance issues.

We are committed to delivering trusted services, life protection and financial planning for our customers. FWD Life Insurance is all about passion, we want everyone to live their life the way they want, to inspire our customers to celebrate living. We are here to take care of our customers’ worries so they can enjoy their life to the fullest.

In order to both maintain and grow capital, the appropriate allocation of capital is the key. Many financial tools are available in the market, it is more important than ever to select the ones that suit most to your risk appetite, expected returns and investment horizon. An insurance policy can be seen as one of your financial management tool, where you receive both protection and capital appreciation.

FWD Life Insurance, specialise in life and health insurance with comprehensive product offerings. We have a variety of products that respond and meet evolving customer needs and preferences across their life-stages. We offer products to provide life, protection, health, savings, retirement, and investment solutions to our customers.

Going forward, as one of the fastest growing companies in Thailand, we will continue to be innovative with our products and services for our customers. We are constantly developing new ways to connect with our customers and provide the best customer experience possible.

In regards to FWD Life Insurance’s products, our Investment team make sure that the premiums are optimally invested. Various financial products are carefully analysed and compared for the best returns under acceptable risk appetite. Besides traditional insurance products, FWD Life Insurance provides an investment-linked product, the perfect combination between protection and investment that can fit your lifestyle, offering you the ability to freely determine level of life protection and adjust your investment fund portfolio based on your needs in different life stages. This product enables our customers to freely choose the mutual funds, where the mandate suits their risk-return level. Moreover, we provide the access to customer service portal that allows customers to manage their own policy information online.

Company: FWD Life Insurance Plc Web Address: www.fwd.co.th Telephone: 0 2632 6000

In terms of our approach to customers, we work with alternative channels comprising of direct marketing and affinity loan-protection businesses with partners such as TMB Bank, Krung Thai Bank Leasing, Industrial and Commercial Bank of China (ICBC) and non-financial partners such as TV Direct and Counter Service.

Wealth & Finance | September 2016

Building the Right Team

PERSONNEL

Running a local authority could be compared to running a Premier League football club, if not a little more complicated. It needs a strong manager, team players, a clear strategy, business mind-set and the drive to give its community what they want – winning experiences

Just like Jose Mourinho, Arséne Wenger and David Moyes, leaders will be publicly lauded for their successes and vilified for their defeats. Or at least, this is something which sprung to my mind during a recent Civica roundtable where representatives from some of the nation’s best and brightest councils discussed the challenges around plotting a course for digital transformation.

With the right leaders in place and a team of well-trained players that are focused on meeting citizen demands, local councils can still thrive in a world moving at rapid pace. Championing a clear and compelling vison But it’s not just digital skills that local government needs to win, it’s also crucial to sell the vision and benefits of change to the wider organisation. As one participant pointed out, being able to persuade the senior leaders is the “most important and also most difficult thing.”

The yearlong and evolving transfer window With the football transfer season upon us, the reality is that many clubs will soon have to learn to cope with the loss of some of their longest standing and best players. The same can be said for local authorities. However, unlike the football world’s set transfer period, local authorities face a year-round challenge.

However, support and contribution from the senior leadership team is crucial, so it is imperative that the vision is set from the top. As was widely discussed during the roundtable, senior leaders must have a compelling vision that they communicate and stick to, every step of the way otherwise the transformation will fail. If the senior team isn’t passionate about it, then nobody else will be. The same can be said for football, if a manager doesn’t believe a team can win a game and get behind and motivate its players, then the likelihood is, they won’t.

Our panel discussed how the drive towards delivering efficient services has seen many view headcount reduction as a rudimentary way to try and balance the books. Naturally this is a cause for concern when years have been spent training up a team of players. As one of the roundtable delegates pointed out, this drain of key skills and knowledge has led to many experiencing an inevitable impact on service levels.

Create a winning team spirit To support the winning vision, it is important that an organisation’s culture adapts to empower the “doers to work.” As one delegate proclaimed, leaders need to set the vision but then “get out of the way and allow the agents of change to work.” And while local government has a reputation for being risk averse and cautious of change, middle level managers and the remainder of the ‘doers’ must feel empowered to take risks, innovate and try new tactics for a digital transformation project to succeed.

This dip is particularly acute at a time when end-user demands are so high. Much like football fans, communities want their experiences of ‘the game’ to be fast, easy, digitally enabled and ultimately positive. On top of this, the sheer number of ‘fans’ has increased enormously, thanks to an increasingly diverse, vulnerable and ageing population. These evolving demands mean that the very rules and objectives of the game are having to shift to accommodate them. This is why there is an increased focus on developing more streamlined, agile, cost-effective and innovative ways of working. Having the right team and culture and the strong leadership to drive this is essential, but unfortunately something many authorities are still struggling with. As one participant explained: “You are often faced with some difficult decisions where you have got people who have a lot of organisational history, knowledge and background that carries value, but know deep down they probably aren’t bought into the change.”

As was reiterated during the discussion, the corporate DNA of a council needs to be as passionate about transformation as the people being brought into it, whether that be people who have been on the team for the last decade or the last month. It is this passion that will drive success in the future. Embrace the opportunity While being forced to reduce overall head-count and letting go some of your longest-serving players is a worry during times when local authority teams need to be focused on driving future success, it doesn’t need to be a seen as crisis. Hull City may have been relegated in 2015, but they used that opportunity to concentrate on using the budget available and re-built a successful and passionate team that has led them back into the Premier League.

Develop new skills on the pitch While tough, the on-going transfer season can also present the perfect opportunity to reinvigorate your team to meet your transformation objectives. Rather than focus on the potential dip in service levels, local councils must focus on building the best team for the job.

Local authority leaders and managers must view the spare spaces on their bench as an opportunity to build a top-notch team with the digital skills to support their strategic objectives. By doing so there’s no reason why your organisation can’t make it through this transfer season and become the champions of local government.

However, it’s not always possible for authorities to tap into the transfer market and acquire the skills they need, so they must take the time to re-invest in upskilling existing team members to ensure the right digital skills are included. As the delegates discussed, if you are “passionate about the journey you’re heading on, you will get people to come with you and the skills you require can be developed on the way.” However, while upskilling an existing team won’t happen overnight, there is no need to place your transformation programme on the treatment table. For many, partnering with external experts in areas you feel you are lacking is a good way to plug any gaps.

Company: Civica Digital Solutions Name: Chris Ginnelly Web Address: www.civica.co.uk

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PERSONNEL 1608LB02

Best in Hospitality

A Home from Home

As a notable player in the food industry, Market Restaurantâ&#x20AC;&#x2122;s chef and owner, Ernesto Martinez reveals the undoubted success of his 10-year-old business based in St. Helena, California which serves lunch, brunch and dinner to local people and tourists. In a special interview, Martinez provides food for thought on what makes the business successful, including the high calibre of his staff, and providing a warm welcome to all who dine there.

hat makes your business successful in a competitive, ever adapting global market? While Market Restaurant has been in existence for over 10 years, the business is very much based on local people and we are their number one choice. Many tourists tend to go where the locals dine, where there is great service and good as well as value.

Company: Market Restaurant Name: Ernesto Martinez www.marketsthelena.com Email: chef@marketsthelena.com Web: www.marketsthelena.com Address: 1347 Main Street, St. Helena, CA 94574 Telephone: +1 707 363 2694

With this in mind, what important contribution does your business provide in regards to customer service? Market Restaurant is dedicated to taking care of people and treating them like our own family. When customers come to the restaurant, they feel it is like their own home, and when they dine with us they feel welcome and warm. Locals who have been to Market Restaurant for many years, are still coming back at least three or four times a week, because of the way in which we treat them when they come here. On the subject of people, what contribution do your staff make to the success of Market Restaurant? The staff at Market Restaurant are the most important aspect of the business, indeed they have been working with me for me between two and eight years or more, and a couple who have been in my employment since day one. The staff are dedicated young people, who are eager to learn more, and most of my management team originally worked as servers and were promoted due to the opportunities I gave them. This was in order to keep the good people that we know, and who will remain a big part of Market Restaurant in the future. What challenges and opportunities lie ahead for Market Restaurant in the future? I would like to continue Market Restaurantâ&#x20AC;&#x2122;s success, and provide the same service and food, and ensure that both customers and staff stay with us. Over the next two or three years, I would like to open a new restaurant, but it is a challenge for me with a family, but I believe I will be ready to expand my business and bring my concept to other people

Wealth & Finance | September 2016

Winners’ Directory Most Outstanding Law Firm - Scotland / Road Traffic Offences Company: Richard Freeman & Co Solicitors Name: Richard Freeman Email: richard@richardfreemanlaw.com Web Address: www.roadtrafficexpert.com Address: 40 New City Road, Cowcaddens, Glasgow G4 9JT Telephone: 0141 353 2223

Excellence in MEM Shipping - MENA Courier Business of the Year 2016 Company: Saami Tradestar Logistics Ltd. Name: Fohad Ayub Latiwala (CMD) Email: fohad.latiwala@gmail.com info@tradestarindia.com Web Address: www.tradestarindia.com Address: 204 Millennium Plaza, Behind Sakinaka Telephone Exchange Andheri Kurla Road, Sakinaka, Andheri (E) Mumbai 400072. Telephone: 91 22 66711463-64 Mobile: 9987363344

European Corporate Top 100 Company: Rhodes Event Management Ltd Name: Phil Bainbridge Email: phil@rhodes-events.co.uk Web Address: www.rhodes-events.co.uk Address: Church House, 23 Churchways Crescent, Bristol, BS7 8SW Telephone: 01179871199

UK Corporate Excellence 2016 Company: Goodlight Web address: www.ledecolights.com Name: Sophia Burr Email: sophia@ledecolights.com

European Corporate Top 100 Company: Saxinger, Chalupsky & Partners (SCWP Schindhelm) Email: vienna@scwp.com Web Address: www.scwp.com Address: Vienna: Wächtergasse 1, 1010 Vienna, Austria Linz: Böhmerwaldstrasse 14, 4020 Linz, Austria Wels: Edisonstrasse 1, 4600 Wels, Austria Graz: Opernring 7/1, 8010 Graz, Austria Telephone: +43 1 90 50 100

UK Corporate Excellence 2016 Best Bespoke UK Hotel & Restaurant Furniture Services 2016 Company: Select Contract Furniture Web Address: www.select-contract-furniture.com UK Corporate Excellence 2016 Company: Kemp IT Law Web Address: www.kempitlaw.com

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