Welcome to our asset management marketing focus
This week’s round up brings you an ETF partnership, a crypto-fund revisit, MiFID II backlash and Tony Hawk on financial advisors.
Movers & Shakers
Is now ➜ Head of Communications and Marketing at La Financiére de l’Echiquier – LFDE
Was: Head of Group Media Relations and Co-Head of External Communication at Société Générale
Is now ➜ UK Investor Relations at COMGEST
Was: Investment Director at Standard Life Investments
Is now ➜ Head of UK Institutional Sales at Franklin Templeton Investments
Was: Head of UK Institutional Business at Janus Henderson Global Investors
Is now ➜ Managing Director – Head of Sales and Marketing at Investcorp Credit Management Europe
Was: CEO at TCW Europe Limited
Kurtosys expresses their best wishes to all starting in their new positions.
Fund in Focus: Coinbase
It’s Flashback Friday time!
For those committed to AMMF readership, you may recall that in March of this year we announced the plan from Coinbase to launch an all-inclusive fund. The company had big aims to unveil new funds catering to investors across a broad range of assets, but faced criticism from the Securities and Exchange Commission (SEC) who were wary of cryptocurrency-related products.
And in recent news, this long awaited Index Fund has finally launched, at least open to investors in the US. Followers of cryptocurrencies and financial meme fans will be aware of the ‘Crypto Whale’ as a term to define the leviathans of the digital asset world; people or groups who hold a large percentage of a coin’s volume. These are seemingly the exclusive target audience here, who can invest between $250,000 and $20 million in the fund which compiles Bitcoin, Ethereum, Bitcoin Cash and Litecoin.
Bitcoin is fact accounts for around 61.5% of the total assets, with Litecoin only making up around 3%. Coinbase has been resolute that it is specifically targeting accredited investors and institutional capital, but an even larger range of digital assets are looking to be rolled out for investors that don’t make up this intended target. The SEC is still in a midst of a major crypto investigation though, looking at exchanges that may have been involved in the manipulation of Bitcoin prices, so there may still be a little wait…
For now though, for those that can invest, users have to pay a 2% management fee. They can redeem funds each quarter after providing a 30 day notice.
It seems Coinbase’s fund launch is still not sewn up even with this big news. More to come from this firm, so we’ll continuing sleuthing to see if or when this promised expanded fund range comes to fruition.
Firm in Focus: UBS
It’s been a busy week for Swiss financial giant UBS, hence it’s stealing of the firm limelight in this edition.
First up, it’s ETF efforts. UBS Asset Management’s ETF business is the fourth largest provider of the famed funds, with $56 billion in assets. BlackRock’s iShares remains the top dog for ETFs, but the monumental news is that the Swiss brand has surpassed this firm in Europe so far this year. It roped in around $6.2 billion in net assets between January and May, and $4 billion in the last month alone. BlackRock only posted net inflows of $4.4 billion, and also had the largest outflows on the continent of $1.9 billion in May. Then again, it saw positive flows across the Atlantic to remain buoyed in the ETF market.
UBS’s growth in the European ETF space has been clearly noticeable, and we are seeing the empirical evidence of its rise to power. ETF assets in Europe are coming up to a tasty $780 billion, with many providers vying for a seat on the ETF Iron Throne, Game of Thrones-style.
And that’s not all!
UBS Global Wealth Management is going for a complete overhaul of its ESG portfolios, in talks with asset managers to help develop funds and separately managed accounts (SMAs).
In a hunt for new strategies and allocation frameworks, the bank is replacing traditional class categories to construct portfolios with the same risk and diversification profiles, and is veering away from corporate bond allocations to focus on investments in green and positively-screened corporate bonds. ESG strategies will also be substituted in to replace traditional equity allocations.
The firms that UBS is working with have been kept under wraps, but they are being consulted to develop custom SMAs or mutual funds to fill the new categories that have been modelled. Such products may include development bank bonds and ESG engagement equities which are lacking. This full transformation is looking to be complete by the end of the year.
The framework has been used in the firm’s home city of Zurich and some countries in the APAC region. This is all part of a huge surge towards sustainable investing for the company which appointed Stephen Freedman as head of sustainable investing in the Americas. Citywire USA also reported that in September of last year, UBS pledged $1 trillion of assets towards sustainable investments.
Again, many firms are vying to gain a foothold in the ESG space, a popular form of investment for those looking to better the world through finance.
We’ve seen ETF subsidiaries of traditional wealth managers so far this edition, but this week has also seen the conglomeration of a fintech and ETF provider.
Not just any fintech however – we’re talking Ocean Capital Advisors, the company chaired by veteran investor and all-round legend Jim Rogers. Rogers, Wall Street alumni and economist extraordinaire, has already started index funds relying on agriculture, metals and alternative energy – the Rogers Global Resources Equity Index – but he’s clearly keen to also make a headway into ETFs with this latest partnership, using futuristic robotic methods.
Ocean Capital Advisors is collaborating with ETF Managers Group to launch a global macro exchange traded funds of ETFs; the ETF fund-of-funds. It is named The Rogers AI Global Macro ETF (BIKR) and is set to be listed on the Securities and Exchange Commission in the US.
It will only invest in single-country ETFs, based on Rogers’ expertise and artificial intelligence. The AI will analyse shifts in market direction during periods of volatility and then determine a change in markets to calculate the costs for exiting the position or maintaining it. Smart!
As of June 4th, the fund was composed of ETFs from 39 countries, with the top four allocations being in:
- Brazil at 7.15%
- South Korea at 4.17%
- Hong Kong at 3.96%
- Mexico at 3.54%
24.65% will be allocated to the Treasury ETF. The weight to each country is capped at 10% at the time of each rebalance of the index. The ETF will carry a management charge of 0.75%.
MiFID II’s myriad of problems continue, at least in the UK, where the omniscient regulator – the FCA – is still very much concerned with the inconsistencies of its application.
It’s all centring around the unbundling of research: separating the costs of investment research from transaction charges and trading commissions to act in the best interests of the investor.
At the FCA’s asset management conference last week, the Financial Times has reported how the regulator is looking to review the actions of fund managers, investment banks and brokers in the next few weeks, given speculation about the pricing packages for research. It will ask firms to provide details about their research pricing models.
Joshua Maxey, the MD of independent research company Third Bridge welcomed the investigation from the FCA, stating this:
“The costs of research packages offered by some of the big banks are totally out of whack with pricing elsewhere in the market […] There are questions over whether some of the pricing packages for research could be viewed as an inducement and contrary to the MiFID rules.”
The FCA is still working on the most appropriate price for research, and there is still some uncertainties about what content needs to be paid for and which does not.
Clearly the fight for regulatory compliance and stability is still ensuing, with rule-bending a major problem for those trying to reign in firms that must adhere to the over-arching directive, even 6 months on.
The General Data Protection Regulation was also a major directive, as well all know, dropping 2 months ago. It’s also another major reason for the employment of Chief Data Officers, with data becoming such a valuable component to any business.
The data visualisers (a completely different role) at Visual Capitalist have provided an infographic insight into the hiring of these experts, which you can view here, dictating their business backgrounds, tenures, and predictions as to how this role will evolve in years to come.
Fintech News: Go East
Returning to our first story of the day is this similar scenario, albeit shifted to Russia.
We’re not talking about the World Cup here (how unpredictable has that been so far?), instead, the two largest banks in Russia are looking to test cryptocurrency portfolios due to increasing demand, according to Finance Magnates.
Sberbank and Alfa-Bank are opening up opportunities for their private investors, all assuming that these tests go well. The two portfolios (Perceptron P and Perceptron RQ) will be tested under the central bank’s regulatory sandbox, where fintechs can be developed away from the law. Both banks agreed to the requirement for the portfolios to be managed by self-adjusting algorithms which, as chairman Alexei Prokofiev notes, work well with traditional financial assets.
The trading will only occur on regulated exchanges including Bitstamp and Kraken, and the portfolio will be reviewed once a quarter. The trial is reported to take around 45 days. It marks another important step in more traditional firms experimenting with new technologies and exciting investment opportunities.
Capgemini are back with their Global Wealth Report, 2018 edition. As this trademark landing page shows, the consultancy firm is adept at gaining a huge amount of information, and presenting it in a way that is easy on the eye: interactive world graphs, and a long-form infographic to display the main statistics. Ultimately, this year looks at the urgency for wealth managers to invest in nascent technologies, and form partnerships to develop hybrid models of tradition and innovation.
You can download the full, in-depth report at the landing page, but the company has also developed a short summary of the lengthy findings in this video format for YouTube fans, which you can check out below:
…certainly another celebrity wealth management story not to be expected, but also not all that surprising. Skateboarding professional Tony Hawk, a hero from my youth for his excellent Pro Skater video game series, became perhaps the most famous ambassador for the sport ever, accruing much fame throughout the nineties and noughties. Therefore, he was certainly very used to dealing with financial advice during his meteoric rise, which is detailed in this interview with WealthManagement.com, giving an honest account of his dealings with investment professionals, from a client’s perspective. Gnarly.
That’s all for this week, but be sure to check back soon for more asset management marketing highlights and fintech snippets from Kurtosys.
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