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Multi-Asset Demand Drives Institutional Business

JP morgan

To save the global economy, central bankers have played the free money melody, entrancing asset managers and asset owners such as sovereign wealth funds and public pensions. With probable shifts in key interest rates, institutional investors are re-examining new strategies and solutions. One of these solutions is multi-asset investing. For example, Latin American pension funds and afores admit their high exposure to domestic markets, some view multi-asset strategies as a liquid alternative to gain exposure to international markets and varying asset classes. Institutional money managers of all stripes are hiring multi-asset operators, salespeople and executives en masse, cashing in on the demand for multi-asset strategies. Asset managers are hiring professionals with deep-rooted client connections from competitors, with experience running multi-asset portfolios and individuals with clear communication skills. In September 2014, Pictet Asset Management made moves into the multi-asset world by hiring Percival Stanion, Andrew Cole and Shaniel Ramjee from Baring Asset Management. The key man departure effect was devastating; Baring Asset Management’s flagship multi-asset fund experienced outflows of £5.5 billion (US$ 8.9 billion) in a time span of 7 weeks after Stanion announced his exit. Insight Investment, a unit of BNY Mellon, lured Victoria May away from JPMorgan Asset Management where she was a managing director in the global multi-asset team – parting a career at the firm starting in 1999. The skill of hiring a multi-asset manager is quite high, typical of a hedge fund manager. Furthermore, multi-asset operators are tasked with the art of modifying asset class weights to produce returns within defined risk parameters.

Pensions can circumvent this by moving multi-asset strategies into the absolute return silo.

Benchmark Fatigue

A good number of institutional investors feel hornswoggled by asset managers, growing tired of beating benchmarks, but losing money. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

SouthGobi’s CEO Arrested, CIC Struggles with Investment

The China Investment Corporation (CIC) has long struggled with its investments in coal assets, specifically in globally-listed coal miner SouthGobi Resources Ltd, which operates its flagship coal mine in Mongolia. In November 2009, CIC and SouthGobi Resources inked a convertible debenture deal. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Qatar Central Bank Deals with MSCI

MSCI, a stock index company whose benchmarks influence investor behavior, has tremendous indirect power impacting the stock markets of smaller economies. In 1988, MSCI released its emerging markets index, a now-widely-used benchmark for many institutional investors wanting access to growth markets. China and South Korea make up the majority of the benchmark, but smaller economies such as Poland, Chile and even Qatar make up other pieces of it.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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bcIMC Buys into Bottling Business with PAI in €1.623 Billion Takeover of Refresco

Dutch soft-drink bottler Refresco Group N.V. has agreed to a buyout offer for all 81.2 million of its shares from French private equity firm PAI Partners SAS (PAI) and Canadian pension manager British Columbia Investment Management Corporation (bcIMC) in exchange for €20 in cash per ordinary share for a total consideration of €1.623 billion. Refresco’s major shareholders, which includes 3i Group, and shareholding members of its boards, who represent 26.5% of outstanding shares, have said they stand behind the deal.

Refresco’s board rejected an initial offer from PAI in April 2017 of €1.4 billion, which they felt did not adequately capture the value added by their plans to bolster its presence in North America through the acquisition of Canadian bottler Cott TB, a deal that went through in July for US$ 1.25 billion.

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