Funds Hub
Money managers under the microscope
from Global Investing:
The only game in town
The extent of the surge to Japan by equity investors is written in sparkly 50-foot-high neon letters by the latest flows data out from Lipper.
We all know that Abenomics has, thus far, cast a spell over markets; the Nikkei is up about 80 percent since the middle of November, when Shinzo Abe first started looking like a bona fide challenger to win power. But it is still startling to see how flows into Japan have dominated investment behaviour.
In April alone, Japan equity funds and ETFs accounted for $9.1 billion of net inflows in a month when total net inflows across all sectors was just $9.9 billion. The money pouring into the Tokyo markets was also more than three times greater than the net inflows at the next best sector. Add the Japan Small and Midcaps sector as well as Asia Pacific funds (heavily weighted to Japan) and April net inflows inspired by the BOJs aggressive monetary policy easing reach $11.2 billion.
On a three month view, the figures show a similar trend, with Japan equity fund net inflows at $17.9 billion, much more than double the inflows enjoyed by the next best sector.
from Global Investing:
LIPPER-Toil triumphs over talent for ‘star’ fund managers
The tumult caused by Richard Buxton’s move from Schroders to Old Mutual in March highlighted the veneration of “star” fund managers, those select few who apparently rise above the crowd to shine their light upon adoring investors.
We don’t need to dwell on Buxton’s track record (annualised return on his UK Alpha Plus fund of 13.7 percent over 10 years), but combined with Mark Lyttleton's departure from BlackRock - his own star rather faded of late - I am drawn to ponder the funds industry’s views of, and hunger for, stellar talent.
from Global Investing:
Big Beasts
This week might just have seen a marked shift in how British investors think about their role as owners of companies.
First up we had three of our largest unions teaming up behind a set of governance guidelines which they will wave noisily in the air at AGMs, but more significantly, Tuesday morning saw the first steps towards building the kind of collaborative architecture for investors envisioned by the Kay Review.
from Global Investing:
Rotation schmotation
We're at risk of labouring this point, but there has been some more evidence that this year's equity rally has not been spurred by a shift away from fixed income. The latest data from our corporate cousins at Lipper offer pretty definitive proof that there has been no Great Rotation, at least not from bonds to stocks.
Worldwide mutual fund flows numbers for February showed an overall move into equity funds of more than $22 billion, and a net flow to bond funds of about half that. Over 3 months it's a similar story, with a net inflow to equities of about $84 billion while bond funds sit close behind at about $75 billion. Little wonder then that there is some evidence at least of movements out of money market funds.
from Global Investing:
LIPPER: Aux armes, millionaires!
(This post has been corrected to reflect a change in the information supplied by Cantab Capital Partners in the fourth paragraph. The Core Macro Fund management fee does not cover back office fees, while the fund does carry a high water mark)
So far the impact of the financial crisis has not hit the wealthy as hard as many protesters would like. Even French millionaires have a found an escape from the modern-day guillotine that is a 75 percent tax rate, in the shape of Russian president Vladimir Putin.
from Global Investing:
Clearing a way to Russian bonds
Russian debt finally became Euroclearable today.
What that means is foreign investors buying Russian domestic rouble bonds will be able to process them through Belgian clearing house Euroclear, which transfers securities from the seller's securities account to the securities account of the buyer, while transferring cash from the account of the buyer to the account of the seller. Euroclear's links with correspondent banks in more than 40 countries means buying Russian bonds suddenly becomes easier.And safer too in theory because the title to the security receives asset protection under Belgian law. That should bring a massive torrent of cash into the OFZs, as Russian rouble government bonds are known.
In a wide-ranging note entitled "License to Clear" sent yesterday, Barclays reckons previous predictions of some $20 billion in inflows from overseas to OFZ could be understated -- it now estimates that $25 to $40 billion could flow into Russian OFZs during 2013-2o14. Around $9 billion already came last year ahead of the actual move, Barclays analysts say, but more conservative asset managers will have waited for the Euroclear signal before actually committing cash.
from Global Investing:
Emerging corporate bond boom stretches into 2013
The boom in emerging corporate debt is an ongoing theme that we have discussed often in the past, here on Global Investing as well as on the Reuters news wire. Many of us will therefore recall that outstanding debt volumes from emerging market companies crossed the $1 trillion milestone last October. This year could be shaping up to be another good one.
January was a month of record issuance for corporates, yielding $51 billion or more than double last January's levels and after sales of $329 billion in the whole of 2012. (Some of this buoyancy is down to Asian firms rushing to get their fundraising done before the Chinese New Year starts this weekend). What's more, despite all the new issuance, spreads on JPMorgan's CEMBI corporate bond index tightened 21 basis points over Treasuries.
from Global Investing:
From cycles to cell phones: tracking Africa’s middle classes
Mobile phone bills and beer consumption patterns are used by investors to assess how fast bank accounts are likely to grow in Africa, but what did investors count to gauge trends before there were mobile phones?
The answer? Cattle, bicycles, radios, founder of Zimbabwean telecoms company Econet Wireless Strive Masiyiwa told an Economist conference on Africa this afternoon. Masiyiwa said he researched ownership of these status items to assess the five-year demand for mobile phones in Botswana when he successfully bid for a mobile phone contract from Botswana's government.
from Global Investing:
What flows out, must flow in?
Much has been made of the flows into U.S. equities this month. Funds have rolled out the red carpet for a record $11.3 billion or so in net inflows over the first two weeks of the year, more when you factor in ETFs.
Just to cool the enthusiasm a little, it's worth remembering that this comes after a torrid 2012.
from Global Investing:
And the winner is — frontier market bonds
Global Investing has commented before on how strongly the world's riskiest bonds -- from the so-called frontier markets such as Mongolia, Nigeria and Guatemala -- have performed. NEXGEM, the frontier component of the bond index family run by JP Morgan, is on track to outperform all other fixed income classes this year with returns of over 20 percent., the bank tells clients in a note today. Just to compare, broader emerging dollar bonds on the EMBI Global index have returned some 16 percent year-to-date while local currency emerging debt is up 13 percent.
That appetite for the sector is strong was proven by a September Eurobond from Zambia that was 15 times subscribed. Demand shows no sign of flagging despite a default in frontier peer Belize and shenanigans over the payment of Ivory Coast's missed coupons from last year. Reasons are easy to find. First, the yield. The average yield on the NEXGEM is roughly 6.5 percent compared with just under 5 percent on the EMBIG.
