Sutherland insights asset management news flash oct 16, 2014

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ASSET MANAGEMENT NEWS FLASH October 16, 2014


Table of Contents Fund Flow ............................................................................................................................. 3 Performance Reporting ......................................................................................................... 7 Technology .......................................................................................................................... 11 Strategy .............................................................................................................................. 15

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Fund Flow California's 529 plan drops PIMCO Total Return Fund October 10, 2014 | PI Online http://www.pionline.com/article/20141010/ONLINE/141019974/californias-529-plan-drops-pimcototal-return-fund ScholarShare, California's 529 college savings plan, on Friday terminated PIMCO's Total Return Fund, said a news release from Bill Lockyer, California state treasurer, who chairs the plan's investment board. ScholarShare had $262 million in the PIMCO fund. The move by the $6 billion Sacramento-based plan is in response “to recent organizational changes at PIMCO, including co-founder Bill Gross' departure, and the resulting uncertainty surrounding the Total Return Fund, which Gross managed,” the release said. “ScholarShare moved the $262 million into the TIAA-CREF Bond Plus Fund Institutional Share Class, which has a risk-return profile similar to the Total Return Fund's,” the release said. That is a new option for the fund. “ScholarShare continues to hold assets in two other PIMCO funds: $111.3 million in the Income Fund and $92.8 million in the Real Return Fund,” the release said. Those funds are “on 'watch' status, which means ScholarShare will continue to closely monitor them,” it said. Tom Dresslar, spokesman for the treasurer's office, said the three PIMCO funds were not on watch before Mr. Gross' departure. “PIMCO is a top-echelon California company,” Mr. Lockyer said in the release. ”And we're confident it will emerge from the shakeup even stronger. But ScholarShare has a duty to protect the college savings of the thousands of families who have placed their money, and trust, in the program. This action fulfills that duty and honors that trust.” Pension Consulting Alliance, the plan's investment consultant, recommended “transitioning these mandates to new management,” according to an Oct. 1 PCA memorandum to the investment board. “At minimum, PCA recommends that clients put PIMCO on 'watch' at the organizational level,” because of Mr. Gross' departure. “His departure, therefore, is a watershed event,” the memo said. “He touched most, if not all, of the fixed-income strategies run by the firm,” the PCA memo said. “We believe this transition is material.”

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Kames to launch two absolute return funds October 09, 2014 | Investment Week http://www.investmentweek.co.uk/investment-week/news/2374694/kames-to-launch-two-newabsolute-return-funds Kames Capital has expanded its absolute return range with the launch of two new mandates for David Griffiths and David Pringle. Launching in November, the Kames Equity Market Neutral and Equity Market Neutral Plus funds will provide investors with a wider choice of absolute strategies. The Market Neutral fund will target a return of cash plus 4%, in all market conditions, on a 36-month rolling basis, investing in between 50-100 equity positions. The fund will be managed by both Griffiths and Pringle who already run the UK Equity Absolute Return Fund, along with Malcolm McPartlin. The Equity Market Neutral Plus fund will aim to provide a more punchy return of cash plus 8%, and will also be managed by the same team. Kames already has runs around £750m in its current absolute return portfolios. The £433m Kames Absolute Return Bond fund managed by Stephen Snowden has returned 7% over three years, while the £340m Kames UK Equity Absolute Return managed by Pringle and Griffiths is up 9.5% over the period. Stephen Jones, chief investment officer, said: "We are seeing some real traction within our existing absolute return strategies as investors appreciate our genuine market neutral returns. "These investors and our European clients are now asking for us to replicate these strategies but with the potential for greater returns on their capital."

TwentyFour plots fresh expansion of closed-ended range October 02, 2014 | Investment Week http://www.investmentweek.co.uk/investment-week/news/2372398/twentyfour-plots-freshexpansion-of-closed-ended-range TwentyFour Asset Management is planning to expand its closed-ended fund range after seeing success in the space with its Income and Select Monthly Income funds.

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The group is considering a new portfolio investing in the direct lending space, to be managed by founding partner and portfolio manager Ben Hayward. TwentyFour’s head of sales, John Magrath, said: “We have been in discussions with investors about accessing different streams of income, and this makes sense. We are looking to see if we can find a suitable structure. “This way, investors can get a good income stream with relatively low risk and relatively low volatility.” Earlier this year, the company raised £100m for Select Monthly Income, which invests in illiquid mezzanine debt and asset-backed securities. Since March, the trust has delivered a total return of 4.5%. The firm also runs a second closed-ended fund, the TwentyFour Income fund, which was launched in March 2013. The specialist bond house is planning to add a number of new offerings to its product range in the coming months, including two open-ended funds for newest recruit Chris Bowie. The group will unveil a corporate bond fund, slated for launch in December, and a low-volatility Defined Outcome 250 fixed income fund which will come to market early next year. Both will be managed by Bowie, who joined the firm in September from Ignis. Meanwhile, the group plans to soft-close its Dynamic Bond fund in the next 12 months after seeing strong inflows into the portfolio. In the last six months, the fund has doubled in size with inflows of £271m, according to data from FE. Assets under management in the fund currently stand at £562m, making it the specialist bond manager’s largest portfolio. The fund has beaten its peer group to return 11.5% over the year to 23 September versus a sector average of 6.9% according to FE. Magrath, said the firm has not placed a hard figure on the capacity of the fund, but will look at it in relation to AUM across its product range.

Vanguard expands ETF range with four more launches October 01, 2014 | Investment Week http://www.investmentweek.co.uk/investment-week/news/2373198/vanguard-expands-etf-rangewith-four-more-launches Vanguard has expanded its exchange-traded fund range with four funds offering exposure to the UK, European and developed world equity markets.

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The Ireland-domiciled funds, listed on the London Stock Exchange today, have ongoing charges of between 0.1% and 0.18%, and bring the number of ETFs Vanguard offers in the UK to 13. Vanguard's FTSE 250 UCITS ETF and the FTSE North America UCITS ETF have ongoing charges of 0.1%. The FTSE Developed Europe ex-UK UCITS ETF charges 0.12% and the FTSE Developed World UCITS ETF charges stand at 0.18%. Europe head of investments Ken Volpert said ETFs are "coming of age" in Europe, adding: "Today’s launch represents Vanguard’s commitment to offering UK investors a complete, broadly diversified ETF and mutual fund line-up in order to construct globally diversified portfolios at an extremely low-cost."

Morningstar adds income portfolios to DFM service October 01, 2014 | Investment Week http://www.investmentweek.co.uk/investment-week/news/2373147/morningstar-launches-twoincome-portfolios-for-dfm-team Morningstar has launched two income portfolios to be actively managed by its Morningstar OBSR Managed Portfolios team. The two new funds, Moderately Cautious Income and Moderate Income, form part of the group's discretionary fund management service, which the company plans to expand further in future. Dan Kemp, co-head of investment consulting and portfolio management, EMEA, said: "We are committed to bringing the best of what Morningstar does around the world to the UK retail market and will be looking to roll this out over the coming years." The new portfolios will combine multi-asset investment techniques with a focus on a stable income stream. Kemp said: "Traditional asset allocation models are poorly suited to building income portfolios, because they use the same capital market assumptions and optimisation process for both growth and income portfolios. "[This] can lead to investors overpaying for high-yielding assets. We have created completely new income portfolios that aim to meet investors' increasing need for a sustainable income." The portfolios will invest in active funds and trackers, with actively managed funds typically expected to hold a Morningstar OBSR analyst rating. They will be priced at 30bps plus VAT, which Kemp believes will make the products competitive in the DFM arena. The launches follow the May 2013 launch of the group's MPS service, which featured five risk profiles: Cautious, Moderately Cautious, Moderate, Moderately Adventurous, and Adventurous.

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Performance Reporting JP Morgan Chase Q3 profits hit $5.6bn October 14, 2014 | FundWeb http://www.fundweb.co.uk/news-and-analysis/us/jp-morgan-chase-q3-profits-hit56bn/2015228.article US bank JP Morgan Chase has seen profits for the third quarter soar to $5.6bn (£3.5bn) from a loss of $400m (£251m) for the same period a year previous. In its latest financial statement for the three months from July to September that revenue had also risen 5 per cent compared with a year previous to reach $25.5bn (£16bn). JP Morgan Asset Management also posted $572m (£359m) net income, a 20 per cent increase from the third quarter last year. Total assets under management also rose 11 per cent to $1.7 trillion (£1.06 trillion) over the period. JP Morgan Chase chief executive officer Jamie Dimon says: “Despite challenges, we have continued to deliver strong underlying performance, maintain our fortress balance sheet and liquidity, simplify the business and adapt to regulatory changes. ”We remain very focused on executing the control agenda and investing to protect our customers and the company for the future.”

Pimco sees company's assets fall by $97bn October 13 2014 | HITC Business http://hereisthecity.com/en-gb/2014/10/13/bill-gross-quitting-pimco-sees-companys-assets-fall-97billion/ Pacific Investment Management Co. said its assets under management declined by $97 billion last quarter, when co-founder Bill Gross left the firm. Bloomberg News reports that assets fell 4.9 percent to $1.88 trillion from $1.97 trillion at the end of the second quarter, Newport Beach, California-based Pimco said Friday in a statement. Changes in assets are a function of fund returns, currency swings and client flows, the firm said in the statement. Gross, 70, on Sept. 26 abruptly left Pimco to run an unconstrained bond fund at Janus Capital Group Inc. His departure prompted investors to review their holdings with Pimco and triggered $23.5 billion in redemptions in September from the Total Return Fund he previously ran.

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Pimco had been struggling with record outflows from the Total Return Fund even before Gross’s departure. The fund has advanced 4.1 percent this year, lagging behind 59 percent of similarly managed funds, according to data compiled by Bloomberg.

Schroders UK Opps hit with £524m outflow on Dean exit October 07, 2014 | Wealth Manager http://citywire.co.uk/wealth-manager/news/schroders-uk-opps-hit-with-524m-outflow-on-deanexit/a776686?ref=wealth-manager-new-latest-news-test1-list Schroders has been hit with a £524 million outflow from the UK Opportunities fund following the departure of Julie Dean. The fund had £1.48 billion under management at the end of September, according to Lipper, after redemptions hit £524 million. Earlier this month Citywire AAA-rated Dean left Schroders, just one year after joining the firm in its acquisition of Cazenove Matt Hudson has taken on management of the Schroders UK Opportunities fund. Under Dean the fund had been a stand-out performer in its peer group, returning 58.7% over the three years to end of July versus a peer group average of 33.53%. Citywire AA-rated Hudson also boasts a strong track record on his Schroder UK Alpha Income fund, which has returned 67.7% over the last three years versus 52.3% by the UK Equity Income sector average. Dean's commitment to Schroders helped the firm hold onto the Schroders UK Growth investment trust mandate amid fierce competition from its previous manager Richard Buxton, who defected to Old Mutual Global Investors. The trust's board is in the throes of the decision making process to appoint a successor.

Barings posts £5.5bn outflow after Stanion exit October 03, 2014 | Financial News http://www.efinancialnews.com/story/2014-10-03/barings-sees-five-point-five-billion-outflowstanion-exit?ea9c8a2de0ee111045601ab04d673622 Baring Asset Management's flagship multi-asset fund has suffered outflows of £5.5 billion in the seven weeks since its founder and investment chief, Percival Stanion, announced his departure from the firm.

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Barings has been one of the most successful UK asset managers in building a multi-asset business, and its Dynamic Asset Allocation Fund, run by Stanion, has been a popular choice with consultants who advise institutional clients on where to allocate money. This time last year, Barings was talking about limiting inflows to the fund as it hit £9 billion. But in the weeks since Stanion's sudden decision to quit, alongside fellow managers Andrew Cole and Shaniel Ramjee, on August 13, the fund has seen dramatic outflows as investors head for the exit at a speed that is unusual in the institutional market. John Walbaum, head of investment consulting at Hymans Robertson, which was one of the firms to recommend clients exit the strategy, said: "There has been a bit of a stampede because the fund was very much seen as Percival Stanion's fund. It was built around him, he recruited the team. Our view was that his departure was a significant issue." Barings now believes the worst is over, according to Marino Valensise, Barings' former chief investment officer, who took over as head of multi-asset in the wake of Stanion's departure. The Dynamic Asset Allocation Fund was valued at £3.6 billion as of the end of September, he said, down from a peak of £9.1 billion in August, but outflows are stabilising. He said: "The first two dealing dates in August were the most painful, and the first was more painful than the second. We still have outflows but they are decreasing now, as I believe the consultants who wanted to leave have already executed this." He added that the firm has now moved into a phase of "winning hearts and minds". He said: "We are meeting our clients one-on-one to them them our proposition, which is based on consistency and continuity. It is not every firm that has a chief investment officer who can step in, who has been a member of the strategic asset-allocation committee for seven years, since six months after the fund was set up." Valensise is now managing the fund alongside Christopher Mahon, another long-standing member of the team. Stanion, Cole and Ramjee are also still with the firm, working their notice periods. A spokeswoman was unable to confirm exactly how much longer they would stay. The trio are set to join Pictet Asset Management to run multi-asset funds. The dramatic outflows illustrate, once again, the risks to asset management firms inherent in dependence upon key individuals. This can be particularly acute where investors fear that funds contain some assets that could be difficult to sell, so that if they are not among the first out, they could become stranded. This was a concern for some investors at Barings' fund. The Royal Borough of Kensington and Chelsea's pension scheme had a £76 million investment in the fund, and upon hearing of Stanion and Cole's departures, its investment team had decided, despite "considerable surprise", to stick with the investment.

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But following "further concern that it might become difficult to exit the strategy as some of the assets were illiquid", particularly the multi-asset fund's holdings in property and alternative assets, the Kensington fund decided to sell, according to papers published at its website. The scheme did not respond to request for comment. Valensise said: "This comment from some clients and consultants, we don't sympathise with this. The proof of the pudding is in the eating. If you compare the asset allocation of the fund today, it's almost exactly the same as the asset-allocation before the outflows. We have been very effective in reducing positions on a pro-rata basis." Valensise added that the team have been able to express investment views as normal, as well: "We trimmed our position in Japanese equities, for example, and also bought back a little bit of sterling as the pound declined just in front of the Scottish referendum." He said there was no question over Baring's continued support for the multi-asset business: "There is no issue in managing a fund that's smaller - the number of people, at around 10, in the multi-asset team has been the same since the fund was below ÂŁ1 billion."

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Technology Nvestly Launches Social Investment Platform for the Average Person October 07, 2014 | WallStreet & Technology http://www.wallstreetandtech.com/asset-management/nvestly-launches-social-investmentplatform-for-the-average-person/d/d-id/1316434? Startup Nvestly Co. is launching a new social investment platform allowing novices and experts to share information and track the performance of their portfolios in a single place. Users can collaborate as well as compete on returns with friends, according to the release. They can also interact with investors and see what other top investors are holding. Los Angeles-based Nvestly has been operating under the radar in beta with a small user base of invitation-only participants since March, but today the site will open up to the public. “There are financial networks out there, but they are usually daunting for the average person,” said Otavio Dalarossa, the co-founder of Nvestly in an interview. While there are quite a few finance sites that offer social media approaches to investing, most are geared to traders, he says. Dalarossa, who has a Master's degree in engineering from UCLA, started working on the platform last April. He previously worked at Capitol Group and Wilshire Associates in the private markets group. He hooked up with a friend -- they both were in an investment club together and in April both left their jobs to found Nvestly. The real-time investment platform allows investors to pull in their portfolios from all five of the major US brokers, including Charles Schwab, E*Trade, and TD Ameritrade. An investor can sign up for Nvestly and link up his Schwab account, for instance, says Dalarossa. “We’re trying to surface information in our network that wasn’t shared before,” he says. On the investing side, users are able to show their portfolios and let others see the positions they hold. Dalarossa says Nvestly is a portfolio-tracker like a Mint for investing. Nvestly uses Intuit technology to securely sync with the brokers. “We use bank-level encryption.” What if some users don’t feel comfortable connecting and showing their stock holdings? “We don’t force anybody to connect anything. Users have the option to do so.” Nvestly will only display information in terms of percentage returns, so it will never show portfolio values or dollar amounts, he says. “Some users are not comfortable showing anything. That is completely OK.” They can assign their profiles to private. And they have discretion over who can follow them, such as only their friends.

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In that respect, Nvestly has security controls similar to Twitter and Instagram, according to Dalarossa. An investor can set his posts to private, and, as on Twitter, someone has to request to see them. Nvestly says its dashboard performs more than 2,000 calculations to provide information on stocks, ETFs, options, and mutual funds. Investors can visualize how their portfolios are moving with the market, and where profitable trades are being made across Nvestly’s user base, according to the company announcement. One drawback to social media sites is that users don’t know if the trades posted are really making money or not. “We noticed that a lots of investors post their latest trades on existing social media sites like Twitter and Stock Twits, but there’s no way of knowing if the information is correct or not. With Nvestly the trade is verified, making it reliable information,” says Chris Tung, CTO and co-founder of Nvestly, in the release. Verifying returns Nvestly also lets investors generate a historical track record for up to 10 years. “If you link up your TD Ameritrade account, we’ll give you two years of data, which is how much TD Ameritrade makes available to us. With a few minutes... you can see your track record from today to two years back,” says Tung. In addition, Nvestly normalizes cashflows, so that if someone puts in or pulls out cash, it doesn’t distort the returns, which is something Google Finance doesn’t do, he says, asserting that viewing information over an extended time period has not been available in the market. To personalize each person’s performance, it generates a track record, which becomes the user’s index, and that is compared to the S&P 500. The company plans to support other benchmarks in the future. “We also overlay your transactions on top of that track record,” says Dalarossa, noting this helps people visualize their investments. Investors can zoom in and out to see their transactions plotted as data points on top of their performance, helping them to recall why they bought stocks at a particular time. Nvestly also provides a portfolio beta calculation and shows the average holding period. In addition to those elements, it plans to add other risk functions, like the Sharpe Ratio. With its social media approach, Nvestly is attracting Millennials, in the 25-to-35 age range, which was its goal from the get-go. “It really resonates with the Millenial group, who are young professionals who felt there wasn’t an investment platform for them, since they were only for traders,” says Dalarossa. Though seasoned individuals are joining the site for some of the analytical features like historical track record and "to showcase for their online investing presence,” he sees a lot of first-time investors signing up for the site. "With this generation, they are scarred by the financial crisis. They don’t have trust, and we’re trying to mitigate that,” says Dalarossa, who plans to add educational tools. One feature coming up is a virtual portfolio that will be pre-built for them with a questionnaire. Another plan is to allow investors to connect with seasoned professionals to get guidance.

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Fidelity Labs Takes Innovation to the Next Level October 02, 2014 | WallStreet & Technology http://www.wallstreetandtech.com/asset-management/fidelity-labs-takes-innovation-to-the-nextlevel/d/d-id/1316288? Fidelity Labs is running a pilot on LinkedIn that lets financial advisers interact with their book of customers. That's just one example of how the tech incubator is seeding ideas and developing future products for its parent company.As someone who keeps an eye on emerging technologies that could apply to financial services, Hadley Stern, VP of Fidelity Labs, believes that pervasive video is going to become an important way that investors meet with their financial advisors. "If someone can Skype or use Facetime with their grandchild, they're going to say, why can't they Skype with their financial advisor?" said Stern, who spoke at InformationWeek's IT Leadership Summit at Interop New York this week. While many technology companies have innovation labs, Fidelity Investments is probably the only firm in financial services to establish a unit that researches and experiments with early-stage technologies. But the future is not always clear and in many ways, that's the premise behind Fidelity Labs. The 80-person unit, headquartered in Boston, with offices in North Carolina, Ireland, and China, was founded in 1988 by Ned Johnson, Fidelity's chairman, who felt it was important to look outside but realized that CIOs were focused on their day-to-day responsibilities. To get that "outside view," Fidelity Labs has partnerships with M.I.T. and also has an association with Stanford University's D School to apply the practices of Design Thinking. While one would expect mobile, cloud, and big data to be at the top of any financial services firms' list of technologies, wearables, robotics, and automation, artificial intelligence, pervasive video, and gamification are on Fidelity Lab's agenda. Its charter is to look at anything that is now unclear, whether it be a technology that will come into the enterprise or customer facing, according to Stern. "We have a set of themes that we address and are constantly adjusting," said Hadley. For example, wearables are a technology that most firms may have looked at with skepticism when they first came out, said Hadley. Last year, Fidelity Labs began experimenting with Google Glass, creating a video and a product. "We spoke to customers and showed them Google Glass and how they might use it in their day as Fidelity customers," he said. This video on YouTube shows someone logging into Google Glass to receive market news, alerts, and quotes. To find out more about Fidelity Market Montitor for Google Glass, Read: "Google Glass: Fidelity Labs Probes the Future of Investing." If the ideas have merit, Fidelity uses a "lean startup approach" to quickly develop prototypes, and then agile development if it progresses to a pilot. It seeks input from customers and also co-develops technology with its customers. A technology consumer forum is a private community where it seeds ideas and gets feedback.

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Some of the ideas move out of the lab into incubators that are running with collocated teams staffed with a product manager, designer, developer, business coach, and design thinker. Customers are coming in to give feedback throughout the process. "They're really iterating through a variety of lean experiments and if they land on something they stay with it," he said. The lab brings in people around a structured dialogue, experiment, or hypothesis. Co-developing with customers One hypothesis is that people would like to store documents online in a secure manner such as wills or legal papers, but they are worried about security on the cloud. This hypothesis evolved into FidSafe, a secure place (cloud-based) to store and share important documents and critical data with trusted individuals and family. Fidelity could have spent a few years building something, not talking to customers, and release it and see what happens. In this case, Fidelity brought in customers and noncustomers and used the Design Thinking staff "to uncover unmet needs," said Stern. Hadley emphasized that Fidelity Labs works with a lot of other groups. "We're not allowed to do our stuff on our own," he said, adding that the lab is very connected other business and technology groups inside Fidelity. "With Fidsafe, the vision is that we are incubating so that one day it will go back to a core product." The lab is already working with tech teams and business teams to validate the idea. In terms of the trends that the lab is looking at, many are in research, some are in beta pilot, and some are at scale, he said. At the conference, Stern elaborated on some other trends that Fidelity Labs is watching: Gamification is seen as a way to make training and compliance more engaging for employees. For the past 12 to 18 months, it's looking at ways 'to game 'its interfaces to make it more interesting for customers, said Stern. As the largest provider of 401k's in the US, one challenge is that investors ten to set it and forget it, or not set it at all. With new hires, it's going to use gamification to present them with a Leaderboard, which compares the person to how others are doing in the 401k process. "A lot of the gamification techniques are not about playing a game. It's simply about letting you know where you are and where you have to go," said Stern. Beat the Benchmark is a game in beta that was developed to teach the basics of investing without reading a dry textbook. On the social media front, Stern said he's beginning to see small social media networks being created for use by financial advisors. Since LinkedIn is the defacto social network for professionals, "We're running a pilot on LinkedIn where advisors can connect with their book of customers, say 500 via their LinkedIn profile," he said. "The social piece is moving from an internal corporate network to a broad customer base to many-to-many customer service representatives engaging with customers," he told conference attendees. More on the edge, Fidelity is keeping an eye on video and robotics, noting that some companies are using iRobot for combining physical and virtual presence to meet with customers. Rather than having a meeting via phone, they can be represented in a conference room. Crypto currencies are also on its radar screen. Fidelity Labs is watching what's happening with Bitcoin. With established companies like Paypal beginning to offer Bitcoin-like services to customers, but this is still a niche. "Bitcoin is to currency what open source is to technology," he said. "Bitcoin is an open, free, standardized, and decentralized currency. This contradicts everything we know about money."

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Strategy RBS looks to close private banking division in India October 13, 2014 | BBR http://www.banking-business-review.com/news/rbs-looks-to-close-private-banking-division-in-india4401847 Royal Bank of Scotland (RBS) is reportedly planning to close its private banking business in India, with an aim to reduce its non-UK footprint and focus on the home market. The lender is selling its international private banking division Coutts, which has around $36bn in assets in markets such as Hong Kong, Singapore, Abu Dhabi and Dubai, reported The Economic Times. In India, the division has four offices in Mumbai, New Delhi, Bengaluru and Chennai. RBS media desk head Linda Harper told the newspaper: "We have said we are exiting our Coutts International business and are looking at options including sale, which will include merging the business with another, joint ventures or a possible sale to reduce our footprint on non-UK-centric activities." The UK Government, which holds 81% stake in RBS, bailed out the bank during the 2008 financial crunch. The lender has since been under pressure to consolidate its international business and focus on the home market. As part of its plans to consolidate foreign operations, RBS already sold its select Asian assets to the Australia and New Zealand Banking (ANZ) in 2010. The lender also tried to sell its Indian retail and commercial banking division to Hong Kong and Shanghai Banking, but it failed due to regulatory issues.

UniCredit to push ahead with sale of bad loans unit: CEO October 13, 2014 | Reuters http://www.reuters.com/article/2014/10/13/us-unicredit-bad-loans-idUSKCN0I20QA20141013 Italy's UniCredit (CRDI.MI) will push ahead with the sale of its UniCredit Credit Management Bank (UCCMB) bad loan unit after receiving offers which are close to what the bank was aiming for, Chief Executive Federico Ghizzoni said on Monday. Ghizzoni said last week UniCredit could consider dropping the sale.

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"The offers we received (on UCCMB) seem pretty close to our proposals," Ghizzoni said, adding a board meeting on Oct. 16 would look at the bids. He said it was unclear whether the bank would take a final decision then. The sale, which could yield around 700 million euros, was part of UniCredit's plans to strengthen its balance sheet ahead of the outcome of a Europe-wide bank asset review at the end of October. Ghizzoni also said UniCredit had received between 4 billion and 5 billion euros in requests from borrowers interested in fresh longer-term funds the European Central Bank has made available to euro zone banks in a bid to spur lending. He added that the bank had already granted some of the funds.

Shunning Wall Street Norms, Blackstone to Spin Off Its Advisory Group October 10, 2014 | DealBook http://dealbook.nytimes.com/2014/10/10/blackstone-to-spin-off-its-advisorybusiness/?_php=true&_type=blogs&_php=true&_type=blogs&module=BlogPostTitle&version=Blog%20Main&contentCollection=Private%20Equity&action=Click&pgtype=Blogs&regio n=Body&_r=1 For decades, it has been a deeply held belief among many of Wall Street’s giants that a multiplicity of business lines is superior to a more streamlined model. But the Blackstone Group, the world’s largest private equity firm, has cast a vote against conventional wisdom, saying on Friday that it would spin off its divisions that provide advice on corporate transactions. Blackstone acknowledged that the advisory division — its oldest line of business — was being hampered by potential conflicts of interest arising from being housed under the same roof as a giant investing arm. To lead the newly independent firm, it attracted a prominent investment banker, Paul J. Taubman, who has been tackling large deals on his own since leaving Morgan Stanley two years ago. Blackstone’s move comes at a time when other big companies — most notably in technology — have been enthusiastically pursuing spinoffs to sharpen their focus and increase their stock prices. This week, Symantec became the latest technology company to announce plans to split in two, after similar moves by Hewlett-Packard and eBay. But while breaking up may be in vogue in Silicon Valley, it is rare on Wall Street, where most giant banks and private equity firms have grown even larger since the financial crisis. Blackstone’s decision, though not seen by analysts as a harbinger of a broader trend, opened a fresh conversation about the merits of slimming down in finance.

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“It’s not just about unleashing trapped capital, it’s also about creating a company that’s easier to manage,” said Mike Mayo, an analyst with CLSA who has been an outspoken critic of big banks. “We have eBay, Hewlett-Packard and now Blackstone. Why aren’t large banks part of this list that have pursued spinoffs?” For Blackstone, which was founded by Stephen A. Schwarzman and Peter G. Peterson in 1985 as an advisory boutique, the decision to break from the advisory business was challenging. The business to be spun off includes a mergers and acquisitions practice, a restructuring services team and a group called Park Hill that helps private equity firms and hedge funds raise capital. In a voice mail message to Blackstone’s employees on Friday morning, Mr. Schwarzman, the chief executive and chairman, said that he pursued the move “not without mixed emotions.” But the firm, which today manages almost $300 billion in assets across private equity, real estate and other investment strategies, ultimately recognized that the advisory business was being stymied by the investing operations. When Lehman Brothers went bankrupt, for example, Blackstone’s restructuring group was prevented from pursuing that opportunity because its real estate investing arm wanted the option of buying assets from the Lehman estate, said Joan Solotar, Blackstone’s head of external relations and strategy. In addition, rival private equity firms would not hire Blackstone’s bankers for competitive reasons, she said. “The number of transactions that the advisory folks were told to stand down on has grown exponentially,” Ms. Solotar said. “That was becoming increasingly just a constraint on the business.” Still, Blackstone’s advisory practice has managed to hold its own. The restructuring group is ranked first worldwide this year in terms of announced business, with $32.4 billion of deals through Friday, according to Thomson Reuters data. The merger advisory group has a much lower ranking, in 89th place globally. But combined, the advisory businesses generated about $380 million of revenue in the 12 months through June 30, comparable to some of Wall Street’s independent investment banks. “It will be easier for the newly independent Blackstone advisory business to compete as a pure play than it has been as a small part of a huge investing organization,” said Roger C. Altman, the executive chairman of Evercore Partners, an investment bank that focuses on providing advice. “That’s true of a lot of businesses, not just in this case.” Blackstone plans to acquire PJT Partners, the fledgling firm created by Mr. Taubman that includes about a dozen partners, and merge it with the advisory business while spinning off the combined entity. When the deal is completed next year, Blackstone said, its shareholders will initially own 65 percent of the new company, while the advisory employees, along with Mr. Taubman and his partners, will own the balance. Joining Blackstone opens a new chapter for Mr. Taubman, who has enjoyed a remarkable run as a solo banker, advising on Verizon Comunications’ $130 billion acquisition of Vodafone’s stake in Verizon Wireless and on Comcast’s $45 billion bid for Time Warner Cable. On the league tables this year, among giant banks, Mr. Taubman ranks 20th, according to Thomson Reuters.

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This spring, he received an email from Hamilton E. James, the president of Blackstone, whom he had known as a client when he was a top deal maker at Morgan Stanley. Soon he met with Mr. James and Mr. Schwarzman, whom he knew by reputation and with whom he had previously dined at Manhattan’s upscale Le Bernardin restaurant. “It’s very clear that this new company is going to have far more opportunities to serve companies and to attract world class talent because it’s independent,” Mr. Taubman said in an interview. “By taking it and separating it, we can take it to an even higher level."

BNY Mellon to shutter European derivatives clearing business October 09, 2014 | PI Online http://www.pionline.com/article/20141009/ONLINE/141009861/bny-mellon-to-shutter-europeanderivatives-clearing-business Bank of New York Mellon (BK) plans to close its European derivatives clearing business because the implementation of European clearing rules has stalled. BNY Mellon had closed its U.S. derivatives clearing business last December because of regulatory and financial reasons. With the closing in Europe, the company no longer will offer derivatives clearing, said a BNY Mellon statement. “Specifically, (European Market Infrastructure Regulation) mandatory clearing has been pushed back to late 2015 or early 2016, delaying the expected expansion of the over-the-counter clearing business, which was a key element of our derivatives clearing strategy,” the statement said. EMIR had been expected to be implemented this year; it would require OTC derivatives to be cleared through central counterparties. BNY Mellon's European derivatives clearing business will be wound down over the next several months.

Florida SBA significantly cuts back $3 billion PIMCO exposure October 07, 2014 | PI Online http://www.pionline.com/article/20141007/ONLINE/141009888/florida-sba-significantly-cuts-back-3billion-pimco-exposure Florida State Board of Administration, Tallahassee, is pulling much of the $3 billion managed by Pacific Investment Management Co. in three portfolios, Dennis D. MacKee, director or communications, said in an e-mailed response to questions.

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FSBA is terminating PIMCO's $535.9 million Total Return Fund and $493.9 million Inflation Response Multi-Asset Strategy Fund. Both were used by the Florida Retirement System's $8.5 billion 401(a) plan. The assets will be moved to two existing BlackRock (BLK) funds, a U.S. debt index fund and a Treasury inflation-protected securities funds. The amounts in those funds weren't available. FSBA expects the transitions to be completed by mid-October. In addition, FSBA will “significantly reduce” a $1.9 billion PIMCO core fixed-income portfolio, a separate account used by the FRS' $145 billion defined benefit pension plan. The size of the reduction hasn't been determined. The proceeds from the core fixed-income portfolio will be reallocated to five existing managers of the FRS pension plan: Amundi Smith-Breeden; BlackRock; Taplin, Canida & Habacht; Neuberger Berman; and Prudential. The existing amounts the five managers run now weren't available. The FSBA expects to complete the transition of the core portfolio proceeds sometime later this fall. Mr. MacKee didn't give a reason for the changes — other than noting the FSBA has had PIMCO on watch since the fourth quarter of last year — or comment about William H. Gross leaving as PIMCO chief investment officer on Sept. 26 to join Janus Capital Management (JNS) as portfolio manager. Other details were unavailable. FSBA oversees $174.7 billion in total assets, including both FRS plans' assets.

Wells Fargo Joins AmEx OptBlue Program As First Bank Acquiring Partner October 06, 2014 | PYMNTS.com http://www.pymnts.com/news/acquiring/2014/wells-fargo-joins-amex-optblue-program-as-firstbank-acquiring-partner/#.VDKcPFc8OUo American Express’ U.S. Small Merchant Group announced that Wells Fargo Bank, N.A. has joined its OptBlue program as the first bank acquiring partner, according to an American Express news release. OptBlue is a new merchant acquiring program that works to extend U.S. small merchant coverage. Wells Fargo is now offering a “one-stop servicing solution” for American Express Card acceptance to U.S. merchants who are eligible, with a projected American Express charge volume of less than $1 million per year, according to the release. OptBlue aims to provide more convenience and accessibility for American Express Card acceptance.

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“This program streamlines the payment processing of American Express transactions for our merchant customers so they can confidently focus on running and growing their businesses,” said Debra Rossi, head of Merchant Services for Wells Fargo, in the release. “We are committed to helping our merchants succeed, and this provides them the ability to offer more payment options to consumers.” “OptBlue is an important facet of our ongoing commitment to enhance the U.S. small merchant experience and the addition of Wells Fargo will allow the American Express card to become more accessible to an even greater number of small merchants nationwide,” added Ed Jay, Executive Vice President, Merchant Services – Americas at American Express, in the release. The addition of Wells Fargo to OptBlue brings the number of participating acquirers in the program to 12, 6 of which are the top 10 in the U.S., says American Express.

BNY Mellon To Acquire Cutwater Asset Management October 06, 2014 | RTT News http://www.rttnews.com/2393364/bny-mellon-to-acquire-cutwater-asset-management-quickfacts.aspx BNY Mellon (BK: Quote) announced an agreement to acquire Cutwater Asset Management, a U.S.-based fixed income and solutions specialist with approximately $23 billion in assets under management. Located in Armonk, NY, Cutwater is currently a wholly-owned subsidiary of MBIA Inc. The terms of the deal were not disclosed. Upon completion of the deal, Cutwater will operate as part of BNY Mellon Investment Management and will be administered by, Insight Investment.

Neuberger Berman to purchase Orchard Square Partners from Ramius October 03, 2014 | HedgeWeek http://www.hedgeweek.com/2014/10/03/210872/neuberger-berman-purchase-orchard-squarepartners-ramius Neuberger Berman is to purchase Ramius’ interest in Orchard Square Partners, which manages a global long/short credit investment strategy with approximately USD475 million in client assets. Orchard Square Partners is led by four senior investment professionals, Norman Milner, Rick Dowdle, Darren Carter and Itai Baron, who have worked together for over eight years and have an average of 18 years of experience. The team is supported by seven professionals who will also be joining Neuberger Berman.

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Orchard Square Partners manages capital for a diversified investor base comprised of insurance companies, institutions, family offices, high net worth individuals, foundations and endowments from North America, Europe, Asia and the Middle East. Terms of the deal, which is expected to close on 31 December 2014, have not been disclosed.

Principal Global Investors increases stake in Columbus Circle to 95% October 01, 2014 | PI Online http://www.pionline.com/article/20141001/ONLINE/141009984/principal-global-investors-increasesstake-in-columbus-circle-to-95 Principal Global Investors agreed to increase its stake in Columbus Circle Investors to 95% from 70%, said Adam Lackey, spokesman at parent company Principal Financial Group. In 2005, Principal Global Investors paid $60 million to acquire a 70% interest in Columbus Circle Investors, a growth equity money manager. Terms of the deal were not disclosed. Since then, Columbus' assets under management have increased to $17.5 billion from $3.9 billion and the number of products and strategies has doubled to eight, according to a news release from Principal Financial Group. “Our investment in Columbus Circle Investors has greatly exceeded our midteens return threshold expectations,” said Jim McCaughan, CEO of Principal Global Investors, in the release. “We're pleased to increase our ownership stake at an opportune time. This investment ensures continued success at Columbus Circle Investors and is in line with our capital deployment strategy and efforts to further enhance shareholder value.” Tony Rizza and Clifford Fox will retain their roles as senior managing directors and portfolios managers at Columbus Circle Investors, and the firm's “management and strategies will continue uninterrupted,” the release said. Karl W. Anderson, spokesman at Columbus Circle Investors, could not be reached for further information by press time. Principal Global Investors manages about $328.2 billion in assets primarily for retirement plans and other institutional clients.

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