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Aberdeen CEO stands strong as firm shakes
Asset Management
<p>Aberdeen Asset Management co-founder Martin Gilbert withstood a 97% fall in share price 13 years ago amid scandal. Now Gilbert is on shaky ground again as Aberdeen gets pummeled by emerging market performance and outflows. Rumors are swirling that Gilbert is looking to sell his Scottish firm, but Aberdeen denies the claims and the fact that the company could be in trouble, reports the Financial Times.<br /> Mr. Gilbert’s opinion on this is clear: “Everyone is talking about Aberdeen like we are in some sort of crisis. Of course we’re not, we’re a business with £300bn of assets under management and more than £550m in net cash.”<br /> Aberdeen has made more than 40 acquisitions, including the massive purchase of the Scottish Widows Investment Partnership in 2014, in attempts to expand the business. But the firm has undeniably been bleeding assets for the last two years. Gilbert is putting up a strong front, and has certainly survived turmoil in the past, but is it time for him to step aside? With SWIP and other businesses now under Aberdeen, the firm could start to turn away from the emerging markets that are dragging it down. Perhaps it's time for Gilbert to let someone else take the reins during this transition.<br /> Photo: Aberdeen</p>
People Moves: Allianz hires UK institutional sales head; Pimco loses head of product management
Asset Management
<p>Allianz hires U.K. institutional sales lead. Tim Bird has joined Allianz Global Investors as director of the U.K. institutional sales and client servicing team, a new role for the firm. Bird comes to the firm from T. Rowe Price, where he worked as head of the U.K. and Irish institutional business. That role is now being filled by Andrew Skeat.  Pensions &amp; Investments</p> <p>Pimco head of product management to retire. Wendy Cupps will leave Pimco at the end of the year, after 21 years working for the California firm. Jennifer Bridwell, head of Pimco's alternative products, will replace Cupps. Cupps has been involved in the executive level turmoil at Pimco since founder Bill Gross's departure last fall, but says the firm's upheaval has nothing to do with the timing of her retirement. Reuters</p> <p>Legal &amp; General grows U.S. index team. Legal &amp; General Investment Management America has hired Greg Behar as head of index investment strategy, a newly created position for the firm. Behar joins from Northern Trust Global Investments, where he served as senior v.p. for global equity.</p> <p>Invesco Perpetual CEO to step down. Mark Armour is leaving the U.K. firm less than two years after becoming CEO. Armour will be replaced by Andrew Schlossberg, currently head of U.S. retail distribution and global ETFs at parent company Invesco. Gulf News</p> <p>&nbsp;<br /> Photo:  ©<br /> &nbsp;</p> <p>&nbsp;</p>
Hourly wages jump in October jobs report; up 2.5% on year
Capital Markets
<p>From the Bureau of Labor Statistics:<br /> In October, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $25.20, following little change in September (+1 cent). Hourly earnings have risen by 2.5 percent over the year. Average hourly earnings of private-sector production and nonsupervisory employees increased by 9 cents to $21.18 in October.<br /> Full release from the BLS here.</p>
Liberal interpretation of IPO helps this etf enjoy facebook's surge
Asset Management
<p>There are a few certainties surrounding Facebook Inc (NASDAQ: FB)'s meteoric rise. It is irrefutable that the stock is up more than 17 percent over the past month. Likewise, it cannot be debated that now home to a market value north of $306 billion (as of Thursday's close), Facebook is worth more than all but a handful of S&amp;P 500 companies.</p> <p>What can be debated is whether or not Facebook is a “new” stock. Three and a half years removed from its initial public offering, Facebook might be new compared to some public companies, but in this case, it depends on what one's view of “new” actually is. In the eyes of the First Trust US IPO Index Fund (NYSE: FPX) and the IPOX®-100 U.S. Index, that ETF's underlying index, Facebook ...</p> <p>Full story available on<br /> Photo: Jason McELweenie </p>
AB’s Peter Kraus says ETFs are a big problem
Asset Management
<p>AllianceBernstein CEO Peter Kraus is not a big fan of ETFs. In fact, he’s not much on the whole idea ofpassive investing. Given who he works for and where he comes from that’s not too surprising, as AB sells mutual fun products and Kraus spent 22 years at Goldman Sachs. But his views are still worth a look regardless of his bias.</p> <p>“Let me bring it down to reality,” Kraus commented in a recent sales meeting with a large group of financial advisers. “You guys woke up one morning in August and the Dow was down 1,090 points. And on that day a $40 billion E.T.F. traded at a 30 percent discount. That should never happen, and if your client traded on that day, you will never get that back. Never. These funds may have low fees but they are not safe, and your clients need to understand that.”</p> <p>Concerns about the impact of ETFs on the financial industry<br /> Kraus went on to note: “If you absorb too much liquidity, there is just not enough grease to make the wheel work. We have seen much higher volatility and much faster price reactions over the past few years, and the main reason is this shift from active to passive investing.”<br /> The ETF industry has grown rapidly over the last five years as active management has underperformed, with around $3 trillion under management today. As ETFs have become an investor mania, worries that too much hot money has been lured into hard-to-trade areas of financial market and into risky strategies are surfacing.</p> <p>Recent critics include Stanley Fischer, vice chairman at the Fed, and well-known investors like Carl Icahn, Howard Marks and others. Nearly all of the critics point to the same worrisome scenario: what if heavy selling hits these funds, and investors are unable to get their money back as promised?<br /> The ETF critics argue that a rush of money into funds that offer instant liquidity favors players with a short-term, trader’s outlook as opposed to the patient, longer-term investor’s perspective.<br /> Moreover, the volatility seen in markets over the summer and early fall has heightened these fears. The critics argue that the promise of instant liquidity in illiquid areas — such as emerging-market bonds, leveraged loans and credit-default swaps — is a recipe for disaster. They also highlight the 2X and 3X leverage many ETFs offer as another significant risk.<br /> Only time will tell.<br /> This article was originally published by ValueWalk. <br /> Photo: Janne Räkköläinen<br />  </p>
People moves: UBS names Asia co-heads; Deutsche Bank appoints Asia CEO
Capital Markets
<p>UBS names Beniwal, Chee as co-heads of Asia. Saurabh Beniwal and Joseph Chee will co-lead the firm’s investment banking division in Asia. They will report to Matthew Hanning, who was made head of investment banking in Asia Pacific in May last year. The reshuffle follows the departure of David Chin after 21 years at the bank. Finance Asia </p> <p>Brevan Howard hires Morgan Stanley’s Asia head of fixed income research and credit strategy. Vikor Hjort has joined as a strategist in Hong Kong after more than 15 years working for Morgan Stanley. EFC. </p> <p>Haitong Bank names Christian Thun-Hohenstein to lead its UK investment banking office. This is Haitong’s latest senior hire as it continues to build-up of its investment banking capabilities in London. Financial News</p> <p>Deutsche Bank AG makes Gunit Chadha CEO of Asia Pacific. The former India head has been chosen as Asia Pacific CEO as the bank closes operations in 10 countries and cuts 15,000 full and part time jobs across the globe. Economic Times<br /> Photo: e3Learning<br /> &nbsp;</p> <p>&nbsp;</p>
People moves: Aberdeen adds two in Asia; Ex-GPIF exec starts at Japan Post Bank
Asset Management
<p>Aberdeen makes two new Asia Pacific executive hires. Daniel Choong – CEO at Nomura Islamic Asset Management –  has joined Aberdeen as head of distribution for its Islamic business in Malaysia. His brief will be to develop a team, products and sales to both institutional and retail distributors in the country. He reports to Country Head Gerald Ambrose.</p> <p>Darrel Chang has been made head of institutional sales in Taiwan, also a new role. The appointment reflects the growing importance to Aberdeen of institutions – sales efforts having been focussed so far on retail mutual funds. Chang, who previously worked at Schroders, joins a senior management team under Michelle Maa, acting country head. Asia Asset </p> <p>ShawKwei &amp; Partners appoints Brian Lau as executive director. Lau will be based in the Asian private equity firm’s Hong Kong office. He was formerly a partner at boutique investment bank and advisory firm Prometheus, where he specialised in cross-border advisory and investment collaboration.ShawKwei (pdf) </p> <p>Former GPIF exec Shimizu joins Japan Post Bank to help lead investments. Recently listed Japan Post Bank has hired Tokihiko Shimizu as general manager of its CIO office. The top-ranking welfare ministry bureaucrat helped spearhead a drive to diversify the $1.2 trillion Government Pension Investment Fund's (GPIF) portfolio during his 7-1/2-year tenure at the fund. The move, which was first rumoured in September, was made public on Shimizu’s LinkedIn page last week. <br /> Photo: Official GDC<br /> &nbsp;</p>
Bitcoin dismissed as 'kind of cute'
<p>A couple of financial heavyweights don't think much of bitcoin. J.P. Morgan CEO Jamie Dimon told delegates at Wednesday's Fortune Global Forum that: "It's just not going to happen. You are wasting your time," reports The Daily Telegraph.</p> <p>"There will be no real-time, non-controlled currency in the world. There is no government that is going to put up with it for long. It's kind of cute now, a lot of senators and congressmen will say, 'I support Silicon Valley innovation', but there will be no currency that gets around government controls."</p> <p>Sharing the platform, Christine Lagarde, managing director of the IMF, was equally scathing.</p> <p>"Pause for a second. As long as those new technologies are going to abuse and take advantage of the yield for anonymity, I think the banking industry has quite a few good days ahead of it; as long as it takes ownership of those issues of capital and culture in order to restore trust, without which no trade, no transaction, no business can take place," she said.</p> <p>It's hard to know whether their scorn is a genuine expression of contempt or hides a deeper feeling of panic.<br /> Photo: BTC Keychain</p>
Breaking gender barriers in startups
Venture Capital
In the Fortune list of 80 start-ups worth $1 billion or more (dubbed unicorns) published last January, only four had female CEOs. But, perhaps barriers in the tech world are being broken down. "The success of prominent female leaders such as Facebook‘s Sheryl Sandberg and Yahoo‘s Marissa Mayer are bringing more attention to women in the tech sphere...An accomplished number of female
JPMorgan’s Kolanovic: Another flash crash possible
Capital Markets
<p>The derivatives research team at JPMorgan that forecast the August market sell off based on algorithmic positioning and then, again based on a reversion of systematic positioning, predicted on September 24 the subsequent market rally in October, has yet another interesting market call.</p> <p>Kolanovic: CTA signals could change based on relatively small market moves as “risk of another technically driven flash crash” is upon us.<br /> “Near term the market is likely more resilient to the risk of another technically driven flash crash,” the November 5 report predicted, citing technical flows from option hedges, volatility targeting, managed futures CTA and Risk Parity funds.</p> <p>“We believe that these strategies (from option hedges, volatility targeting, managed futures CTA and Risk Parity funds) largely re-levered to pre August crash levels,” which was “a significant driver of the S&amp;P 500 performance in October” and is now posing downside risk today, a November 5 research report from JPMorgan’s celebrated derivatives research team of Marko Kolanovic and Bram Kaplan says.</p> <p>“Given the tight trading range over the past year, CTA signals have risk of changing on relatively small market moves (i.e. there is elevated ‘CTA gamma’). On the other hand, given the lack of a large put option gamma imbalance, and perhaps some residual buying from VT funds, near term the market is likely more resilient to the risk of another technically driven flash crash.”</p> <p>Kolanovic<br /> Volatility targeting and risk parity strategies have re-loaded.<br /> Considering the sharp decline in realized volatility, the report notes strategies that target constant volatility were required to re-lever their portfolios. While volatility targeting strategies may be buying on the way up, the report forecast that “realized volatility is unlikely to drift much lower (e.g. to the summer lows), so any residual buying from (volatility targeting) strategies may not be sufficient to push the market much higher.”</p> <p>The report noted that nearly $300 billion is trading in volatility targeting, targeting a range from 8 to 9 percent. Risk parity strategies are significantly larger, with $500 billion used to influence markets, but the strategies can vary significantly. “Risk Parity strategies employed by Hedge Funds may be substantially different from those employed by e.g. Pension funds (using risk parity in house as a longer term asset allocation method).” To account for this challenge JPMorgan uses different models for hedge funds, accounting for nearly $150 billion in risk parity assets, and pension funds, which account for nearly $350 billion. These funds de-levered in August and September, but re-levered in October to finish at their pre-crash equity allocations.</p> <p>In other words, the gun is cocked and ready to fire.</p> <p>This story first appeared in ValueWalk.<br /> Photo: Dave B</p>