|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||62.15 - 62.60|
|52 Week Range||44.59 - 66.44|
|Beta (3Y Monthly)||1.44|
|PE Ratio (TTM)||14.70|
|Forward Dividend & Yield||2.90 (4.65%)|
|1y Target Est||N/A|
BlackRock and Amundi have beaten competition from more than 30 rival investment managers to win the first two private credit mandates awarded by Nest, the UK state-backed pension scheme. BlackRock will ...
(Bloomberg Opinion) -- With negative yields becoming commonplace across even the longer maturities in many of the world’s government bond markets, fixed-income managers are letting their imaginations run a little wilder about what might come next. So brace yourself for renewed talk of helicopter money, the implementation of Modern Monetary Theory, and the prospect of the benchmark U.S. Treasury offering less than zero.Bond investors have spent the past few years becoming accustomed to previously inconceivable developments in the markets. So they can be excused for developing an immunity to just how extreme recent shifts in the debt market have been, at the forefront of which is the explosion in the amount of negative-yielding debt. As the chart above shows, the total value of “less than zero” bonds has trebled since October as interest rates on fixed-income securities get lower and lower. The entire suite of German government bonds from three months to 30 years now offers negative yields for the first time, as does the even longer-dated Swiss yield curve. Monday saw Ireland’s 10-year borrowing costs dip below zero for the first time.With central banks poised to continue or resume the bond-buying programs they introduced after the global financial crisis, other government debt markets look set to follow suit in breaching the zero bound. Spain’s benchmark bond yields a smidgen above 0.2%, Portugal’s is a tad below 0.3%. U.K. 10-year yields are at a record low of about 0.5%, half their level of less than three months ago. And while U.S. yields remain at about 1.8%, Joachim Fels, Pimco’s global economic adviser, says it’s “no longer absurd” to speculate that the world’s benchmark rate for 10-year borrowing costs could drop below zero. “We may get there faster than you think,” he says.The problem with pushing down borrowing costs that are already at or near record lows is that you get diminishing returns on how much of an impact it has on the real economy – hence the failure of central banks to lift inflation and meet their targets in recent years.So Eric Lonergan, a fund manager at M&G Prudential, reckons the concept of helicopter money, with central banks creating cash and delivering it to individual citizens to spend, might come back into vogue. “The logic is compelling,” Lonergan wrote in an article for the Financial Times last week. “One problem with this common sense idea is its simplicity, which rarely appeals to economists charged with taking important decisions.”As central bankers run out of ammunition from their conventional armories, a more radical shift may become inevitable, with governments acknowledging that they must play more of a role in combating a global slowdown – and a new-fangled economic experiment called Modern Monetary Theory becoming the next experiment in how to boost growth.MMT, which argues that an expansionary fiscal policy can be financed through cheap debt without risking default, has been criticized for not being modern, not being monetary and not being a theory. That didn’t stop the first textbook on the subject from selling out its initial print run earlier this year, nor the adoption of MMT as a cause celebre by Alexandria Ocasio-Cortez and other left-wingers in the U.S. Democratic party.There’s likely to be a “pro-growth convergence of fiscal and monetary policies,” Pascal Blanque, the chief investment officer of Amundi SA, told me recently. Blanque previously expected only a recession to usher in MMT. Now he sees “an alignment of the planets between the man in the street, politicians, academics, politicians” that may well see it becoming mainstream thinking.In “Through the Looking-Glass,” Lewis Carroll’s Alice says there’s no use trying to believe in impossible things. “I daresay you haven’t had much practice,” the Queen replies. “Why, sometimes I’ve believed as many as six impossible things before breakfast.” Bond investors are starting to understand her thinking.To contact the author of this story: Mark Gilbert at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Amundi SA, Europe’s biggest independent fund manager, saw customers withdraw money for a third consecutive quarter in the three months through June. It’s far from the only asset manager suffering outflows. And as the drumbeat of reports and research questioning portfolio managers’ claims to beat the market grows ever louder, the reluctance of clients to commit funds is completely rational.Halfway through the 36 pages of slides Amundi published along with its results on Wednesday is a data set entitled “Solid Performances.” There is another – less Panglossian – way of reading the numbers. One of the slides purports to argue that 64% of the firm’s fixed income assets and 59% of its equity holdings outperformed their relevant benchmarks in the first half of this year. I’d argue that customers should read those figures the other way around; that more than a third of Amundi’s bond bets and almost half of its stock picks fared no better than their respective indexes.Similar skepticism is justified with respect to how Amundi’s performance ranks against that of its peers. On a five-year basis, for example, the firm highlights that 75% of its funds ranked in the top two quartiles for performance as measured by research firm Morningstar. Or, alternatively, the figures show that a quarter of its funds languished in the bottom half – hardly a terrible performance, but still suggesting a one-in-four chance that you’d have been better off buying an index tracker.On a shorter timescale, its performance has become even less impressive, depending how you look at it. On a one-year horizon, almost a third of Amundi’s funds were in the bottom two quartiles.And all of these figures are calculated before fees. Having a 69% chance of beating the benchmark over the course of a year, depending which Amundi fund you chose, doesn’t seem like disastrous odds – until you include those fees, which erode your returns.None of this is to single out Amundi for criticism. The entire fund management industry uses similar marketing methods, and arguably the French firm’s five-year performance is still impressive. But it is far from the only asset manager to suffer outflows. Janus Henderson Group Plc said on Wednesday that it suffered a seventh consecutive quarter of withdrawals in the second quarter, while Man Group Plc, the world’s biggest publicly traded hedge fund, saw net outflows of $1.1 billion in the first half of this year.The European asset management industry in general has seen “virtually zero net inflows” so far this year “given the persistent wait-and-see approach from savers and investors resulting from strong risk aversion,” Amundi says.I’d add a caveat to that. As more customers question the value that active managers claim to be able to add to investment strategies, the industry faces an existential crisis. Even if surging markets restore investor faith in the outlook, low-cost index-tracking funds will capture more of their money.At least Amundi has a hedge against that trend; its passive business attracted almost 7 billion euros ($7.8 billion) of assets in the first half of the year, growing assets under management in exchange-traded and smart beta funds to 114 billion euros. For fund managers that don’t offer those products, the future looks increasingly bleak.To contact the author of this story: Mark Gilbert at firstname.lastname@example.orgTo contact the editor responsible for this story: Edward Evans at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Bank of England Governor Mark Carney says investment funds that promise to allow customers to withdraw their money on a daily basis are “built on a lie.” The chief investment officer of Europe’s biggest independent asset manager agrees with him.“There is no point denying we are faced with a looming liquidity mismatch problem,” says Pascal Blanque, who oversees more than 1.4 trillion euros ($1.6 trillion) as the CIO of Amundi SA.As I wrote earlier this month, market liquidity can melt away faster than a dropped ice-cream in a heatwave. That prospect is one of “various things keeping me awake at night,” Blanque told me earlier this week.In the wake of the global financial crisis, regulators have obliged investment banks to bolster their balance sheets. That has reduced the amount of capital those institutions are willing to commit to the securities markets. So in many areas, liquidity is already drying up. For example, daily turnover in U.S. high-yield debt is at its lowest since 2014, as noted by my Bloomberg Television colleague Lisa Abramowicz:Market making, where firms generate prices at which they are willing to either buy or sell financial products, is effectively “a public good,” Blanque says. As that activity declines, the drop in turnover reduces the banking industry’s exposure to a collapse in prices or a surge in volatility. But the dangers are simply transferred, rather than diminished.“Market making is falling off a cliff at the level of individual banks, but creating a systemic problem,” Blanque says. “The banks are less risky – but the risks have been shifted to the buy side.”That poses a problem for regulators, something the Bank of England acknowledged in a working paper published earlier this month. As the funds industry has supplanted banks as a source of credit in the past decade, households and companies have benefited from a useful alternative source of financing. But, the report warned, we don’t know how this market-based system will respond under stress.Modelling such a scenario “can generate an adverse feedback loop in which lower asset prices cause solvency/liquidity constraints to bind, pushing asset prices lower still,” the BOE found. In other words, the new market structure may be worse than the old.The difficulty for asset managers in such an eventuality is finding sufficient cash to repay exiting investors while preserving the structure of the portfolio without distorting market prices, according to Blanque. “We don’t know the channels of transmission, we don’t know how the actors will act,” he says. “It is uncharted territory.”Part of Amundi’s response to the issue is to include liquidity buffers in its portfolios, which may mean holding securities such as German bunds and U.S. Treasuries, which should always trade freely. But the industry needs to come up with a common definition so that liquidity is included along with risk and return when assessing a portfolio’s robustness, Blanque says.For now, asset managers have to cope with what Blanque called “the sacred cow” of allowing clients to withdraw funds on a daily basis. “It is a bomb, given the risks of liquidity mismatch,” he warns. “We don't know if what is sellable today will be sellable in six months’ time.”Regulators are slowly coming to realize that the fund management industry has increased exponentially in both size and systemic importance in the past decade. I’ve argued before that asset managers should be stress tested in the same way as banks are forced to assess their ability to withstand market shocks. The recent distress experienced by customers of Tim Haywood, Neil Woodford and Bruno Crastes suggests that need is becoming more urgent.To contact the author of this story: Mark Gilbert at firstname.lastname@example.orgTo contact the editor responsible for this story: Edward Evans at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- With almost $13 trillion of bonds in the global debt market yielding less than zero, fund managers are increasingly chasing returns in less liquid assets. The result could be a reduction in the transparency about what portfolios are really worth. Regulators are right to be paying heightened attention to any misadventures in illiquidity.The decline in interest income available in the global bond market – even on securities that haven’t yet breached the zero bound – is truly staggering. The average yield on the world’s $54 trillion of investment grade debt is a paltry 1.5%, down from 9% at the start of 1990 and about half of its average since then.The high-yield debt market looks increasingly misnamed. $2.4 trillion of the low-rated bonds yield less than 6%, down from as much as 21% in 1990 and an average of almost 10% during the past two decades or so.The world’s stock market, as measured by the MSCI World Index, is within touching distance of a record high – even as the prospect of a synchronized global economic slowdown is forcing central banks to turn on the monetary spigots once again. So investors are understandably a bit nervous about the prospect for further gains in public equities, and are turning increasingly to private markets, which supposedly offer higher rewards in return for less liquidity.In Europe, private equity is poised to overtake hedge funds as the dominant asset class in the so-called alternatives space, according to a report published earlier this month by Amundi SA, Europe’s biggest independent asset manager, and research firm Preqin. Aggregate investment in private equity has grown by 25% since the end of 2015, reaching 559 billion euros ($628 billion) by the middle of last year.The total capital allocated to all flavors of private equity last year, including infrastructure, private debt and venture capital, climbed to a record 374 billion euros. And with 56 billion euros raised in Europe for private investments in the first quarter, 2019 is on track to set a fundraising record, the study said.That shift away from public markets shows no signs of stopping. A survey of more than 550 European investment firms published by Greenwich Associates earlier this week shows private equity is the most-favored investment destination in the coming three years. Moreover, the survey showed European institutional investors are twice as likely to hire a new private equity specialist in the coming year as they are to recruit a public equities portfolio manager. The danger here is that unlisted investments are effectively worth whatever the fund manager says they are – unless and until they have to find a buyer, either voluntarily or compulsorily. And that’s worrying.“Illiquid assets are not marked to market,” the Greenwich report notes. “As a result, changes in valuation take longer to play out in institutional portfolios, muting quarter-to-quarter volatility in portfolio valuations and funding ratios.”The pivot toward private markets is an understandable response to the worldwide drop in yields. But higher returns necessarily come by taking on increased risks. Clients and regulators alike should be wary of allowing asset managers too much leeway in the values they assign to unlisted assets. Regulators have every reason to look closely.To contact the author of this story: Mark Gilbert at firstname.lastname@example.orgTo contact the editor responsible for this story: Edward Evans at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Deutsche Bank AG’s big shrinkage plan runs to more than 4,700 words over 47 pages. Apart from a few passing references sprinkled throughout the announcement, the document devotes just half a page and 115 words to the asset management business specifically. That feels like a missed opportunity.Germany’s biggest bank still owns about 80% of DWS Group GmbH after the fund manager’s initial public offering in March last year. The division is still Deutsche Bank’s most profitable and is expected to remain so in coming years. It expects to make a return on tangible equity of at least 20% by 2022, compared with the 8% target for Deutsche Bank as a whole.DWS, though, has had to trim its ambitions for growing assets under management. Its initial target was for net new money inflows of 3% to 5% annually. After clients pulled money in every quarter of 2018, even a 6% rebound in the first three months of this year leaves the business expecting growth of just 2% to 3% for 2019 as a whole, according to the restructuring plan.If Deutsche Bank is serious in its stated aim of growing DWS into one of the world’s 10 top global asset managers, organic growth will be insufficient. With 704 billion euros ($788 billion) of assets, it doesn’t even make the top 15.The 10% drop in Deutsche Bank’s stock price since the revamp was unveiled shows how skeptical investors remain about the lender’s ability to execute on a plan that will see 18,000 jobs go and cost 7.4 billion euros. So it needs its fund management business to sparkle.For that to happen, DWS needs to bulk up. Talk earlier this year that UBS Group AG was considering a plan to combine DWS with its fund unit before spinning the pair off as a separate entity has helped to fuel a 32% rally in DWS’s shares this year. It appeared that the Swiss bank was willing to let Deutsche Bank control enough of the venture to allow it to continue consolidating the unit’s earnings rather than just its dividends, at least at the outset. Other mooted suitors include German insurer Allianz AG, which could combine DWS with its Pimco business, and Amundi SA, currently Europe’s largest independent asset manager with about $1.7 trillion of assets.But as I wrote in April, the point of listing DWS last year was to free it to make acquisitions using its shares as currency. And in June, DWS Chief Executive Officer Asoka Woehrmann said playing an “active role” in the long-awaited consolidation of the fund management industry was a “personal ambition.”Even as it shrinks its banking footprint, the fund management division is the one part of Deutsche Bank that needs to grow through acquisition. If it wants to achieve its ambitions for DWS, the German lender needs to free the business to embark on a shopping spree. Otherwise, the dream of joining the trillion-dollar club of top 10 asset managers will remain just that – a dream.To contact the author of this story: Mark Gilbert at firstname.lastname@example.orgTo contact the editor responsible for this story: Edward Evans at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- With the explosions that have rattled Natixis SA’s H2O Asset Management and Neil Woodford’s flagship fund dominating the headlines in recent weeks and months, it’s worth noting that the environment for the European fund management industry as a whole is actually not as bad as those idiosyncratic blow-ups might suggest.The share prices of the region’s biggest asset managers have bounced back from the trashing they underwent last year. That’s partly because of lingering expectations that the sector is overdue for a bout of mergers and acquisitions. But it also reflects the likelihood that clients have been putting money to work, reversing the outflows that the industry suffered last year.Amundi SA reckons that $100 billion was withdrawn from European mutual funds in the final three months of 2018. Figures just released by the European Fund and Asset Management Association and the Investment Company Institute show investment fund assets in the region grew by 6.8% in the first quarter compared to the fourth, rising to 15.77 trillion euros ($18 trillion).Equity gains are clearly helping to tempt investors back into the markets. The Stoxx Europe 600 Index is up by more than 13% this year, putting it on track to deliver its best first-half gain since 1998, according to figures compiled by my Bloomberg News colleague Namitha Jagadeesh:And in fixed income markets, expectations that the Federal Reserve will lead the way in prompting central banks to ease monetary policy anew have helped goose bond market returns around the world:Challenges for the industry persist. The concerns about illiquid holdings, that have prompted investors to withdraw billions of euros and pounds from portfolios managed by H20 and Woodford, look set to spark a new bout of oversight and rules from the regulators. And those two episodes will only accelerate the shift into low-cost index tracking funds, to the ongoing detriment of active managers.But for now, life is about as good as it’s going to get for European funds. The bad news? It’s likely to delay – yet again – the much-need and long-anticipated consolidation that the industry still sorely needs.To contact the author of this story: Mark Gilbert at firstname.lastname@example.orgTo contact the editor responsible for this story: Jennifer Ryan at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
France's largest asset manager Amundi is exploring a deal to merge its operations with Deutsche Bank's listed asset manager DWS but only if it can take control, a source familiar with Amundi's strategy said. The idea of merging DWS with a peer emerged in recent months as Deutsche Bank discussed a possible merger with smaller rival Commerzbank, although those talks have since ended in failure. "Amundi would not necessarily buy all [of DWS] and would be ready to leave a stake of DWS listed on the stock market, but there is no point in being a minority partner," the source said.
DWS said on Friday that it grew its assets under management by 6 percent to 704 billion euros ($784 billion) in the first three months of the year. The 2.5 billion euros of net inflows handily outstripped the consensus among analysts for 200 million euros of new client money.
Allianz and Amundi are considering rival deals to tie up their asset management units with Deutsche Bank's DWS, sources close to the matter said on Wednesday. Any deal to merge DWS with a peer and give it additional scale could also be presented as a strategic revamp of the troubled bank, in case Commerzbank talks fail.
DWS Group GmbH, which is 78 percent-owned by Deutsche Bank AG, is scheduled to report on Friday how its funds fared in the first three months of 2019, after suffering outflows in every quarter of last year. Meantime, the troubled Swiss fund manager GAM Holding AG has asked potential buyers to put forward proposals by early May, Bloomberg News reported last week. The question facing any potential buyer of the firm and its 137 billion Swiss francs ($137 billion) of assets – which include Switzerland’s Union Bancaire Privee and the French bank Natixis SA, according to Bloomberg News – is whether GAM’s reputation is tarnished beyond repair, or whether a new owner could convince clients to entrust the firm with more of their capital.
DWS Group GmbH, the asset manager controlled by Deutsche Bank AG, has recouped almost all of last year’s losses, bringing its shares to within touching distance of the 32.50 euros ($37) for which they were first sold to the public a year ago. Last month, my colleagues at Bloomberg News reported that German insurer Allianz SE might consider including DWS in its fund management business, which includes bond market powerhouse Pacific Investment Management Co. Last week, they added UBS Group AG to the list of potential suitors, writing that the Swiss bank might combine DWS with its fund business and spin the two off as a separate entity.