The three dimensions of investing today are risk, return, and impact. Experts say investors concerned about ESG need to ‘do their homework’

"Future of Finance," an Insider virtual event, was presented on June 8, 2021.
“Future of Finance,” an Insider virtual event, was presented on June 8, 2021.

  • When it comes to data on sustainable investing, asking the right questions is key.
  • Execs from Bridgewater and LGIM outlined policies that could encourage better ESG disclosure.
  • The conversation was part of Insider’s virtual event, “Future of Finance,” presented by Grayscale on June 8, 2021.
  • See more stories on Insider’s business page.

As financial institutions grapple with the steep risks posed by the imminent global climate crisis, ESG (environmental, social, and governance) investing has emerged as a potential solution. While these sustainable investment strategies have gained popularity with investors, data and reporting surrounding ESG factors can be opaque and confusing.

Karen Karniol-Tambour, co-chief investment officer for sustainability at Bridgewater Associates, the world’s largest hedge fund, said that sorting through that data and making sense of it is part of an investor’s job. She said answering questions about an investment’s sustainability merits may feel like a new challenge, but is not any different than answering familiar macroeconomic questions about a country’s growth rate, for example.

Karniol-Tambour made these comments during Insider’s recent virtual event, “Future of Finance,” presented by Grayscale, which took place on June 8, 2021.

This panel, titled “Sustainable Investing Pays Off?” was moderated by Bradley Saacks, senior finance reporter at Insider, and featured Karniol-Tambour along with John Hoeppner, head of US stewardship and sustainable investments at Legal & General Investment Management (LGIM) America, a division of the $1 trillion global asset manager.

Karniol-Tambour said that the key question for Bridgewater in evaluating ESG investments is what they are trying to get out of the data.

“Don’t think about what is presented to you, but [think about] what concept are you actually trying to capture,” Karniol-Tambour said.

Hoeppner said in analyzing sustainable investments, LGIM is trying to “create [its] own points of view and rely less on others.”

The firm has two key goals in mind when it looks to ESG investing, Hoeppner said. The first is to raise standards across the board with regard to disclosure and the second is to find an investment advantage by looking at subsets of ESG data that are closely linked to mispricings in the market.

Karniol-Tambour said her clients want to make the highest returns with the lowest risk possible. She said that there are many areas in which ESG factors are material to making money in a particular market.

“For example, if we’re going and deciding whether or not we think the price of copper is going to go up or down, you really just can’t do that analysis without looking at what’s the pace going to be in which it will transition away from carbon,” Karniol-Tambour said.

“Investing is not two-dimensional risk and return. It’s actually three-dimensional risk, return, and impact -or risk, return, and sustainability. And that third dimension, deserves just as much care, attention, analysis, customization.”

Multiple strategies are available to investors seeking to maximize impact. Hoeppner said that divestment, or opting out of investing in certain assets because they are not sustainable, is “overused” as a strategy. He said that LGIM, as a major investor in many public companies, prefers to use its access to have “constructive engagements” with their portfolio companies through discussions and proxy votes on how to navigate risk.

Moderator Bradley Saacks asked the panelists about the regulatory environment for ESG investing. Hoeppner mentioned that in the US today, if you are participating in a 401k or pension as part of your corporation, it is legally unclear whether or not you can have a sustainability fund in your lineup.

He said he is optimistic that regulators will sort out the issue, which he attributed to an “incorrect assumption” that ESG strategies were deployed for non-financial benefits, whereas he believes most ESG research is actually performed with the goal of reaping financial benefits.

He also expressed the hope that the Securities and Exchange Commission (SEC) enforces some sort of mandatory disclosure for climate risk for all companies, arguing that information is the basis for a free market.

Karniol-Tambour pointed to Australia’s policy of making companies report their potential exposure to modern slavery and eradicate it as an example of sound policy based on a robust data ecosystem.

Without disclosures and data, Hoeppner said, it is difficult to discern companies’ credibility on ESG issues.

“All investment managers see ESG and sustainable investing as a commercial opportunity,” Hoeppner said.

“How do you tell one asset manager from another one when everyone says that they have the best sustainability credentials? The hard answer is that you have to do your homework.”

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JPMorgan’s new co-heads of consumer banking offer fresh clues about Jamie Dimon’s succession plans

Jamie Dimon
JPMorgan CEO Jamie Dimon

  • JPMorgan, headed up by CEO Jamie Dimon, is the biggest US bank by assets.
  • JPMorgan this week shook up leadership of its massive consumer bank.
  • JPMorgan has also made new digital banking hires, including poaching an exec from Goldman.
  • Visit Business Insider’s homepage for more stories.

JPMorgan is the biggest bank in the US and a bellwether for the global financial system. So when the firm’s senior-most leaders talk, Wall Street pays attention.

The bank on May 18 promoted two women to co-lead the firm’s massive consumer and community banking business: consumer-lending chief Marianne Lake and chief financial officer Jennifer Piepszak. The pair will take over running the division from Gordon Smith, who made the surprising announcement that he was retiring this year from his roles as co-president and co-chief operating officer of the firm and CEO of CCB.

The moves shine a light on succession planning at the firm, as Lake and Piepszak are two of the top contenders to take over for CEO Jamie Dimon when he eventually retires. Smith had also been rumored to be in the running for the top job before announcing his retirement.

JPMorgan also continues to feast on hires from Goldman Sachs’ Marcus division: Sherry Ann Mohan, a 15-year Goldman veteran who was mostly recently CFO of the bank’s consumer business, will start as CFO of JPMorgan’s business banking in August. This comes after the bank poached three Marcus executives in April.

JPMorgan is also beefing up its tech offerings for employees, appointing CIOs to newly formed groups.

The bank opened its U.S. offices on May 17 and is requiring all employees to come in by July, according to an internal memo sent in May. JPMorgan is also planning to bring some interns to the office this summer, and CEO Jamie Dimon has said he expects staff to be maskless in the office later this year.

Read more:

Recent hires and exits at JPMorgan

collage (1)
Melissa Goldman and James Reid

There have been many opportunities in recent weeks for existing JPMorgan executives to step into new roles at the firm. In addition to Marianne Lake’s and Jennifer Piepszak’s promotions to co-heads of consumer and community banking, the firm named James Reid and Melissa Goldman to be CIOs of two newly-formed groups to help modernize tech for employees.

Reid is CIO of the firm’s employee experience and corporate technology organization, which is modernizing the tech employees use internally. And Goldman, also the firm’s chief data officer, is CIO of the finance, risk, data, and controls (FRDC) technology group.

JPMorgan also hired another ex-Marcus executive, Sherry Ann Mohan, chief financial officer for business banking, CNBC first reported. Mohan, who will start August, was previously at Goldman Sachs for 15 years and most recently the CFO of the consumer business, including the Marcus brand and Apple Card.

And the bank’s former global head of diversity and inclusion for the wealth and asset management business, Tia Counts, departed last week for index giant MSCI, where she will be the new chief diversity and inclusion officer.

More on people moves here:

Wealth management plans

MASPETH, NY - NOVEMBER 17: Shivani Siroya, Kristin Lemkau and Stephanie Cohen speak onstage at Girlboss Rally NYC 2018 at Knockdown Center on November 17, 2018 in Maspeth, New York. (Photo by JP Yim/Getty Images for Girlboss Rally NYC 2018)
Kristin Lemkau, center, the chief executive of JPMorgan’s US wealth management business.

JPMorgan is planning to significantly expand its financial advisor force, bringing the firm closer in size and scope to its rival firms in wealth management. Over the next five to six years, the bank is considering hiring as many as 4,000 advisors to roughly double its current base, US Wealth Management Chief Executive Officer Kristin Lemkau told Business Insider this fall.

Lemkau, who has been with the bank for over two decades and was previously its chief marketing officer, was named head of JPMorgan’s new wealth division in December 2019. Its various wealth businesses, including its self-directed wealth product, were reorganized under one umbrella.

Read more on JPMorgan’s wealth management plans:

Read the original article on Business Insider

How JPMorgan plans to boost wealth management and battle fintech competition

Jamie Dimon
JPMorgan CEO Jamie Dimon

  • JPMorgan, headed up by CEO Jamie Dimon, is the biggest US bank by assets.
  • The bank has big plans for wealth management growth.
  • JPMorgan also made new digital banking hires, including poaching an exec from Goldman.
  • Visit Business Insider’s homepage for more stories.

JPMorgan is the biggest bank in the US and a bellwether for the global financial system. So when the firm’s senior-most leaders talk, Wall Street pays attention.

The bank is set to report first-quarter earnings on Wednesday, April 14. Earlier this month, CEO Jamie Dimon published his annual shareholder letter.

JPMorgan has also recently nabbed three new hires for its digital and product leadership team for consumer and community banking (CBB) from some of its biggest competitors.

Read more:

Recent hires and exits at JPMorgan

Sonali   Headshot SDivilek
One of JPMorgan’s recent hires is Sonali Divilek, who was a key executive at Goldman Sachs’ Marcus in charge of products.

JPMorgan on April 13 announced three new hires to support its consumer- and community-banking team.

Sonali Divilek, who was the head of product at Goldman Sachs’ Marcus, is one of the hires. The departure of Divilek, whom Chase said would be joining the bank this summer as the head of digital channels and products, represents a blow for Goldman’s consumer business as it looks to compete amid a raft of leadership and engineering exits.

Thasunda Brown Duckett, a rising star at the firm and the first Black woman to join its influential operating committee, left JPMorgan in February to lead financial services and retirement firm TIAA. Jennifer Roberts, who headed the firm’s business banking group, was named the bank’s new consumer head in March.

More on people moves here:

Wealth management plans

MASPETH, NY - NOVEMBER 17: Shivani Siroya, Kristin Lemkau and Stephanie Cohen speak onstage at Girlboss Rally NYC 2018 at Knockdown Center on November 17, 2018 in Maspeth, New York. (Photo by JP Yim/Getty Images for Girlboss Rally NYC 2018)
Kristin Lemkau, center, the chief executive of JPMorgan’s US wealth management business.

JPMorgan is planning to significantly expand its financial advisor force, bringing the firm closer in size and scope to its rival firms in wealth management. Over the next five to six years, the bank is considering hiring as many as 4,000 advisors to roughly double its current base, US Wealth Management Chief Executive Officer Kristin Lemkau told Business Insider this fall.

Lemkau, who has been with the bank for over two decades and was previously its chief marketing officer, was named head of JPMorgan’s new wealth division in December 2019. Its various wealth businesses, including its self-directed wealth product, were reorganized under one umbrella.

Read more on JPMorgan’s wealth management plans:

Read the original article on Business Insider

Inside JPMorgan’s plans to boost wealth management and battle fintech competition

Jamie Dimon
JPMorgan CEO Jamie Dimon

  • JPMorgan, headed up by CEO Jamie Dimon, is the biggest US bank by assets.
  • The bank has big plans for wealth management growth.
  • JPMorgan is also looking to bring workers back to offices, including a new Manhattan HQ.
  • Visit Business Insider’s homepage for more stories.

JPMorgan is the biggest bank in the US and a bellwether for the global financial system. So when the firm’s senior-most leaders talk, Wall Street pays attention.

The bank is set to report first-quarter earnings on Wednesday, April 14. Earlier this month, CEO Jamie Dimon published his annual shareholder letter.

Read more:

Wealth management plans

MASPETH, NY - NOVEMBER 17: Shivani Siroya, Kristin Lemkau and Stephanie Cohen speak onstage at Girlboss Rally NYC 2018 at Knockdown Center on November 17, 2018 in Maspeth, New York. (Photo by JP Yim/Getty Images for Girlboss Rally NYC 2018)
Kristin Lemkau, the chief executive of JPMorgan’s US wealth management business.

JPMorgan is planning to significantly expand its financial advisor force, bringing the firm closer in size and scope to its rival firms in wealth management. Over the next five to six years, the bank is considering hiring as many as 4,000 advisors to roughly double its current base, US Wealth Management Chief Executive Officer Kristin Lemkau told Business Insider this fall.

Lemkau, who has been with the bank for over two decades and was previously its chief marketing officer, was named head of JPMorgan’s new wealth division in December 2019. Its various wealth businesses, including its self-directed wealth product, were reorganized under one umbrella.

Read more on JPMorgan’s wealth management plans:

Recent hires and exits at JPMorgan

Thasunda Brown Duckett, a rising star at the firm and the first Black woman to join its influential operating committee, left JPMorgan in February to lead financial services and retirement firm TIAA. Jennifer Roberts, who headed the firm’s business banking group, was named the bank’s new consumer head in March.

More on people moves here:

Read the original article on Business Insider

No one should be surprised at the Archegos blowup, given the ‘wild west’ nature of the swaps market, Heritage Capital’s Paul Schatz says

Trading floor
Inside a trading floor on the New York Stock Exchange

  • “Epic greed and euphoria” have led people to make mistakes and go “beyond irresponsible behaviour,” Paul Schatz said in an interview.
  • The swaps market needs to be regulated and funds must disclose more, the head of Heritage Capital said.
  • Cases like this and January’s GameStop saga paint a negative picture of money managers, he continued.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The implosion of Archegos Capital over its derivative holdings that went sour should not come as a surprise to anyone, given the opaque and volatile nature of the swaps market in which the US hedge fund invested, Paul Schatz, president and founder of Heritage Capital, said on Monday.

Archegos Capital was forced to dissolve its holdings at the end of last week as it had become unable to meet margin calls from its lenders, sending major entertainment and tech stocks tumbling. The family office was facing financial difficulties even before then and various big banks had to tried to prevent a crisis by entering into swaps contracts with Archegos last week. This exposed its funds to volatile equities worth billions of dollars.

On Monday, Credit Suisse and Nomura announced that they would suffer significant losses after a US hedge fund was forced to liquidate its stock holdings when it could not meet margin calls from its lenders. Their share prices dropped significantly on Monday along with those of other major banks and the companies Archegos – which a number of media outlets confirmed was the fund in question – had previously held.

“The swaps market is, frankly, like the wild west,” Schatz told Yahoo Finance in an interview.

Years of super-cheap financing thanks to low interest rates set by central banks has fueled a record boom in investment, sending stocks to record highs and inflating the value of everything from cryptocurrencies, to junk bonds.

Schatz said this had led to “epic greed and euphoria” in the sector over the last six months. Paired with high levels of confidence and the hubris of investors, this inevitably leads to people making “egregious mistakes” and engaging in “beyond irresponsible behaviour” he continued, drawing lines between the current situation and cases like the 1998 Long Term Capital Management crisis, in which one of the world’s biggest hedge funds blew up, roiling markets and requiring government intervention.

Fund managers that own assets beyond a certain size must report their positions regularly to the US regulator. However, this does not apply to the type of swaps that Bill Hwang’s Archegos Capital used. Schatz said these were “essentially non-disclosed, undisclosed, secret derivatives”.

Schatz pointed out markets were already jolted once this year in January, when retail traders organized themselves through Reddit and bought up shares in GameStop, which resulted in skyrocketing prices and forced some institutional investors who had bet against the video retailer to close those positions, even at a loss.

Schatz predicts the public will continue to lose confidence in the stability of financial markets and regulators and politicians will get involved. “These large funds that have very little disclosure requirements like this certainly need to have more disclosure in the swaps market,” he said.

He said the problem with using swaps – a form of derivative – was positions being leveraged over and over again, without prime brokers being aware of what their competitors are doing – this “can become this ginormous pile of leverage that only takes the slightest little prick” to unravel.

“The swaps market should not exist the way it is. It fully should be brought on exchange, there should be better disclosure and there should be better protection for investors” Schatz said.

Read the original article on Business Insider

Credit Suisse is overhauling its asset management business and has suspended bonuses after Greensill collapsed

Credit Suisse
The logo of Swiss bank Credit Suisse is seen at a branch office in Bern, Switzerland October 28, 2020. Picture taken October 28, 2020.

  • Credit Suisse is shaking up its asset management business following the collapse of Greensill.
  • Ulrich Körner will become the new CEO of the bank’s asset management business from April 1.
  • Three senior asset management employees have temporarily stepped aside.
  • See more stories on Insider’s business page.

Credit Suisse is overhauling its asset management business as it faces regulatory investigations into its dealings with Greensill Capital, warning on Thursday that its results and client confidence could be hit by the finance firm’s collapse.

Switzerland’s second-biggest bank and its asset management arm are reeling from the implosion of around $10 billion of funds related to British supply chain financier Greensill, heaping pressure on CEO Thomas Gottstein.

Credit Suisse said in its annual report that Swiss regulator FINMA was looking into the matter and reviewing its impact in relation to the bank’s so-called Pillar 2 buffer, which is capital banks hold against risks.

“We can confirm that we have also imposed a Pillar 2 buffer in this context as stated by the bank in its annual report,” FINMA said, adding it was in contact with other authorities.

Credit Suisse stuck to its guidance on capital and said plans to buy back at least 1 billion Swiss francs ($1.1 billion) worth of stock this year were still on.

The bank named Ulrich Koerner as its new head of asset management and said it would separate the business into its own division from April 1. It has been part of the international wealth division run by Philipp Wehle.

Koerner will return to Credit Suisse from arch-rival UBS, where he most recently served as adviser to the CEO from 2019 to 2020. He ran UBS Asset Management from 2014 to 2019. Koerner was previously a senior executive at Credit Suisse Financial Services and ran the Swiss business.

Current asset management head Eric Varvel, who is also chairman of Credit Suisse’s investment bank and head of its U.S. holding company, will focus on his other roles.

Credit Suisse’s annual report said some unidentified fund investors had threatened litigation over the Greensill affair and the ultimate cost may be “material” to operating results.

“The portfolio manager has been informed that certain of the notes underlying the funds will not be repaid when they fall due,” it added.

“We might also suffer reputational harm associated with these matters that might cause client departures or loss of assets under management,” it said.

Three senior asset management employees who helped oversee the Greensill funds have temporarily stepped aside.

The annual report showed the bonuses for a number of senior employees involved, “up to and including Executive Board members”, had been suspended.

Credit Suisse shares gained 2.5%.

The new structure bucks a trend for blending Credit Suisse products and services in a seamless offering to its wealthy clients. It could, however, help address suggestions that the model lent itself to internal conflicts of interest.

Asset Management lost 39 million Swiss francs ($42 million)before taxes last year after a hefty writedown on an investment in a U.S. hedge fund.

Read the original article on Business Insider

The rise of Cathie Wood, the rockstar stock-picker whose ETFs are dominating 2021

cathie wood ceo ark invest profile 2x1
Ark Invest’s Cathie Wood.

So far, this year has belonged to Cathie Wood. You could argue last year did too.

The founder of ARK Invest has seen flows into her active exchange-traded funds beat those of massive franchises like BlackRock’s iShares, thanks to her blockbuster 2020 performance, which was driven by bets into mega-growth stocks like Tesla.

Her funds have delivered eye-popping returns, with her flagship fund up more than 150% in 2020.

Wood has built such a large following that an announcement about a new ARK fund moved markets. Her podcast has landed big-name guests such as Elon Musk. She’s become a favorite of the r/WallStreetBets crowd.

Insider spoke with investors in both Wood’s business and funds, longtime colleagues, analysts at her firm, and fans who chart her rise through newsletters and memes. They describe her leadership, which comes with four decades of investing experience, and her curiosity, which keeps her analysts on their toes.

But threats are also looming: Talk of a stock-market bubble and an impending correction are brewing; the easy conditions created by massive fiscal and monetary stimulus could taper off as the economy recovers from the pandemic; and Wood’s highly concentrated funds have ballooned, which has raised concerns about capacity.

SUBSCRIBE NOW TO READ THE FULL STORY: Cathie Wood made a career betting on the future. Insiders discuss how the ARK Invest founder won the funds (and hearts) of memelord traders and boomer investors alike.

Read the original article on Business Insider

Inside the rise of Cathie Wood, the rockstar stock-picker whose ETFs are dominating 2021

cathie wood ceo ark invest profile 2x1
Ark Invest’s Cathie Wood

  • Cathie Wood has reached a cult-like status with day traders and professional investors alike.
  • In 2020, ARK’s ETFs grew at the fastest proportional rate of any ETF or mutual-fund manager.
  • Insider spoke with investors, analysts, and fans about whether ARK’s rise is sustainable.
  • Visit the Business section of Insider for more stories.

So far, this year has belonged to Cathie Wood. You could argue last year did too.

The founder of ARK Invest has seen flows into her active exchange-traded funds beat those of massive franchises like BlackRock’s iShares, thanks to her blockbuster 2020 performance, which was driven by bets into mega-growth stocks like Tesla.

Her funds have delivered eye-popping returns, with her flagship fund up more than 150% in 2020.

Wood has built such a large following that an announcement about a new ARK fund moved markets. Her podcast has landed big-name guests such as Elon Musk. She’s become a favorite of the r/WallStreetBets crowd.

Insider spoke with investors in both Wood’s business and funds, longtime colleagues, analysts at her firm, and fans who chart her rise through newsletters and memes. They describe her leadership, which comes with four decades of investing experience, and her curiosity, which keeps her analysts on their toes.

But threats are also looming: Talk of a stock-market bubble and an impending correction are brewing; the easy conditions created by massive fiscal and monetary stimulus could taper off as the economy recovers from the pandemic; and Wood’s highly concentrated funds have ballooned, which has raised concerns about capacity.

SUBSCRIBE NOW TO READ THE FULL STORY: Cathie Wood made a career betting on the future. Insiders discuss how the ARK Invest founder won the funds (and hearts) of memelord traders and boomer investors alike.

Read the original article on Business Insider

BestInvest calls out the top 5 worst performing asset management firms, with Invesco taking pole position for the sixth time running

worried trader
the funds must have underperformed the benchmark by 5% or more over the entire three-year period of analysis to make the list.

  • BestInvest, an online investment platform, just released their twice-yearly “Spot the Dog” report.
  • The report analyses the worst-performing funds across different sectors.
  • These are the five firms that had the most assets under management in the list.
  • Visit the Business section of Insider for more stories.

Even the biggest names in asset management can get it wrong and BestInvest just called out some of the top losers.

In its twice-yearly ‘Spot the Dog’ report, the online investment service names and shames the top underperforming funds and firms, and Invesco has topped the list for the sixth time in a row.

“The top slot in Spot the Dog continues to be held by Invesco with 11 funds totalling £9.2 billion. Four of these funds are Tibetan Mastiff-sized beasts,” the report said.

However, the report, which doesn’t win any popularity contest among fund managers, does note that Invesco’s number of funds that made the list has fallen this time.

What is a ‘dog fund’?

So how does BestInvest identify the funds that fall into this somewhat cruel category using two filters?

First, it filters by fund universe to identify “those that have failed to beat the benchmark over three consecutive 12-month periods,” the report said.

The benchmark chosen by BestInvest is determined by the sector the fund, designating one that operates in an index that “represents the overall movements in the market that the fund operates in,” it said.

This highlights those that have consistently underperformed and allows the research to remove those that “may simply have had a short run of bad luck,” it added.

Secondly, the funds must have underperformed the benchmark by 5% or more over the entire three-year period of analysis.

The Kennel Club

These are the firms with the most assets under management, which made the list because of their “dog funds”:

1. Invesco

For the sixth time running, Invesco has landed the top “dog” spot, with 11 funds making the list, worth £9.2 billion in total. Admittedly, this is down from 13 funds valued at £11.4 billion from the last report.

Two of the firm’s funds were repeat offenders on the list: Invesco’s UK Equity High Income and UK Equity Income funds, delivering -21% and -19% respectively over a three year period compared to the benchmark.

But, in the firm’s defence these funds were only recently handed to new managers, “who are now tasked with turning them around,” the report said.

Moreover, Invesco has gone through a broad shakeup over the last year after the appointment of a new chief investment officer, Stephanie Butcher.

“This is clearly a work in progress,” the report added.

2. Jupiter

The UK-based firm Jupiter leapt up the rankings from ninth to second place in this report following its July 2020 acquisition of Merian Global Investors, making it “rescue home for two sizeable beasts,” the note said

The now enlarged group oversees 8 “dog funds”, totalling £4.1 billion of assets. The biggest of these is the Merian North American Equity fund, which has seen a -14% return in the last three years compared to the benchmark.

3. St. James Place

St James’s Place’s (SJP) in-house fund range has frequently “lurked near the top spot in the hall of shame” and sits in third position with four funds totalling £4 billion, the report said.

The number of SJP funds that made this edition has halved since the last with the SJP UK High Income fund, previously managed by fallen star Neil Woodford, escaping the shaming.

The SJP Global Smaller Companies fund was one of this edition’s biggest losers in the Global sector, coming fifth in that particular list and trailing the benchmark by -32%.

4. Schroders

Schroders took this edition’s fourth place after it number of funds to make the list rose to 11, with an increase of £4 billion in asset.

Three of the Schroder’s included are managed by its QEP team, the report highlight, who use a “systematic, data driven investment process.”

Both the Schroder European Recovery and Global Recovery funds – which target undervalued companies – made the list, underperforming the benchmark -22% and -33% respectively. These, and the firm’s income funds investing in the US, Europe and globally, struggled in the 2020 environment where ‘growth’ stocks significantly outperformed.

These growth sectors include technology and communications services which have been the biggest ‘COVID-winners’, like video-conferencing software Zoom and EV company Tesla.

Therefore, growth strategies largely left funds targeting undervalued companies or dividend-generating businesses lagging in the dust during 2020.

However, if the global economy recovers as most banks are forecasting, these ‘recovery’ or ‘value’ plays could catch-up, making significant gains.

Of note, the report excluded the £3.3 billion ‘dog fund’ managed by the firm in its joint venture with Lloyds Bank.

5. JPMorgan Asset Management

JPMorgan’s inclusion in the top five came down solely due to the JP Morgan US Equity Income fund with its huge  £3.2 billion in AUM, which fell -27% below the benchmark, the report said.

Unfortunately for JPMAM, the fund has been underweight technology stocks in a period when companies like FAANG and tech cult names like Tesla have been market leaders, as many tech companies do not pay dividends.

But, like Schroders, this could turn around if value sectors like Banks and energy – which are the main dividend payers – catch up on any economic recovery.

Read the original article on Business Insider

What you need to know on the markets this week: Bitcoin and beyond; ‘Hey big spenders’ – what the funds did with their cash; a platinum opportunity?

In this photo illustration a Bitcoin logo seen displayed on a smartphone with the stock market graphic in the background
Bitcoin hit a record of nearly $50,000 last week.

Last week saw some game-changing events for the cryptocurrency market, which pushed the prices of bitcoin, ether and others to record highs. Meanwhile, on the commodities front, a broad sweep higher in raw materials prices has got market-watchers pondering if we are on the verge of a new super-cycle. This coming week may reveal if big investors are buying into crypto, as well as the resilience of star precious metal, platinum. 

Bitcoin to the moon… and beyond

Bitcoin hit a record of nearly $50,000 last week and this time around, it wasn’t a motley crew of amateur traders organizing an effort to squeeze the price higher. Elon Musk, a long-time advocate of cryptocurrencies and of bitcoin, in particular, had already ignited a frenzy in “meme crypto”  Dogecoin.

But it was Tesla – the electric vehicle maker he founded and runs – unveiling a $1.5-billion purchase of bitcoin that fueled this latest leg higher. Tesla said it would also consider allowing customers to pay using the digital token, possibly opening the floodgates to other large companies to do the same.

Online payment groups like PayPal and Square already allow users to buy and sell with crypto. Last week, Mastercard joined their ranks and said it would allow the use of some cryptocurrencies on its network.

RBC suggested Apple could be the next big corporation to adopt bitcoin, and the CFO of Twitter told CNBC on Wednesday that it too could buy the token. But bitcoin isn’t ready to go mainstream, according to the world’s biggest asset manager, UBS. And Treasury Secretary Janet Yellen has, again, voiced reservations about cryptocurrencies in general, saying their use in online crime and for money laundering is growing.

BlackRock, the world’s biggest fund manager, last month said it would allow two of its funds to invest in bitcoin futures. So who’s next? 

This week could bring the answer to that question, when Wall Street’s big guns report how they invested their money in the final three months of 2020.

Read more: Tesla just invested $1.5 billion in bitcoin. Here are the bull and bear cases for the crypto, according to legendary macro trader Mike Novogratz and Goldman’s wealth-management CIO.

“Hey big spender” – how the funds spent their funds

This coming week, the biggest US investors will release details of what they put money into -and sold off – in the fourth quarter of 2020. The so-called 13-F filings with the Securities and Exchange Commission offer a breakdown of the holdings at the end of December of any fund with more than $100 million under management.

However, in the wake of the GameStop short-squeeze in January, anyone hoping to get a look at what stocks the funds are betting against will be disappointed. A 13-F filing contains long positions only, along with a fund’s options holdings, convertible notes and American Depository Receipts (ADRs) – or holdings of US-listed stock of foreign companies. But no short positions. 

Even so, most investors – professional and amateur – scour the 13-Fs to see what the “smart money” did last quarter. Warren Buffett, “Big Short” investor Michael Burry – who must be one of the lone Tesla shorts standing -, Ray Dalio, David Einhorn, Seth Klarman and Ryan Cohen will all release details of what they bought and sold.

Read more: It could take just 2 catalysts for pockets of speculation to snowball into a widespread bubble, one global strategist says. He recommends 3 ways to capitalize on this frothy environment.

Platinum-star performance 

The price of platinum rocketed by 15% to above $1,200 an ounce its highest in over six years last week, driven by a heady cocktail of a weaker dollar and a broad investor push into commodities and making it the best-performing raw material of the past week. It scorched past crude oil, copper and lumber and is on track to top the charts for the month of February. 

Until around last March, in the depths of the coronavirus crisis, platinum had been on a long, painful downtrend. Aside from its use in jewellery, platinum’s main industrial use was in the catalytic converters of diesel-powered vehicles. The diesel-emissions scandal, which led to a drastic drop in sales of diesel vehicles and several punitive measures aimed to reduce the number of them on the roads, has eaten into platinum demand – so much so that for the past six years it has been worth less than gold, despite being far more scarce. 

As the world transitions to using cleaner sources of energy and cutting emissions, several commodities are emerging as being central to this effort, platinum being one of them. 

Platinum, together with iridium, is used as a catalyst in proton exchange membrane electrolysis – used to extract hydrogen from water as a source of zero-emissions sustainable fuel. 

Johnson Matthey, the world’s largest refiner of platinum group metals, said in a report on February 10 the global platinum market ran a deficit for the second year in a row in 2020. It looks likely to see a shortfall again this year. 

“The move towards an expected supply deficit is occurring at a time of increased focus on tightening emission regulation in regular combustion engines while accelerating green hydrogen production has increased demand for platinum-based electrolyser capacity,” Saxo Bank head of commodity strategy Ole Hansen said in a note last week.

“Having been in a downtrend for nearly a decade, platinum’s breakout last November helped attract renewed investment demand, not least after gold hit $2000/oz and its premium to platinum rose above $1000/oz. These developments helped attract increased switching activity between the two metals,” Hansen said.

Chart of the week – pot luck

Last week, cannabis stocks went parabolic, driven by double-digit percentage rallies in the likes of Aphria, Tilray and Sundial Growers. Joe Biden’s victory in the presidential election and Democrat promises to decriminalize cannabis have given a number of investors, including the Reddit traders, reason to pile in. Cannabis was the top-performing investment theme last week, according to broker CMC Markets’ Global Thematic ETF screening too, with a gain of nearly 40%, compared to runner-up uranium, with a 11% increase.

Relative performance of the ETFMG Alternative Harvest ETF vs S&P 500
Relative performance of the ETFMG Alternative Harvest ETF vs S&P 500.

Economic calendar for the w/c Feb 15

Feb 14 Japan GDP 

Feb 16 Eurozone GDP growth Q4

Feb 17 US retail sales/FOMC minutes

Feb 17 Australia unemployment rate

Feb 17 ECB monetary policy meeting minutes

Feb 18 Australia retail sales

Feb 18 Philadelphia Fed business activity index

Feb 19 UK retail sales/consumer inflation 

Feb 19 Canada retail sales

Feb 21 PBOC rate decision

Feb 21 New Zealand retail sales

Earnings calendar for the w/c Feb 15

2/15 BHP Billiton

2/15 BHP Group

2/16 CVS Health Corp

2/16 Glencore

2/16 Palantir Technologies

2/17 BAT (British American Tobacco)

2/17 Garmin 

2/17 Rio Tinto

2/17 Shopify 

2/18 Airbus

2/18 Barclays

2/18 Carrefour

2/18 Credit Suisse

2/18 Daimler

2/18 EDF (Electricité de France)

2/18 Nestlé

2/18 Newmont Mining

2/18 Walmart

2/19 Allianz

2/19 Danone

2/19 Renault

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