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Al Gore’s 'sustainable' generation investment beats most hedge funds
Hedge Funds
<p>Former Democratic vice president and almost-president Al Gore is known as a visionary and a thinker on a grand scale. Gore has remained politically and socially active since the turn of the century, and has spent his time writing several books and championing important environmental issues.<br /> Although not a lot of people are aware, Gore has also been focused on making money since he retired from politics. He and several colleagues founded a firm called Generation Investment Management a little over a decade ago. The asset management firm is focused on, and limits its investments to, businesses that operate on the principles of environmental sustainability.<br /> Gore and his colleagues at Generation describe their goal as the demonstration of a new version of capitalism that will create incentives for financial and business operations to reduce the environmental, social and political damage caused by unsustainable capitalistic excesses. In practical terms, Gore and his Generation partners have made more money using an environmentally conscious model of “sustainable” investing than most fund managers who were seeking profits at almost any environmental or social price.<br /> Keep in mind that this is just the track record of one firm, which has managed assets of relatively modest size for just over a decade. Generation has an AUM of close to $12 billion as of early October, with pension funds and other institutional investors the largest sources of capital, around half based in the U.S and half overseas.<br /> The MSCI World Index reports an overall average growth rate of 7% over the last 12 months. Based on data from Mercer, a UK analytics firm, the average pre-fee return for the global-equity managers it surveys was 7.7%. This meant that after fees (averaging about 70 basis points), the returns brought in by the average professional money manager barely kept up with low-cost passive index funds.<br /> However, Mercer’s data shows that the average return for Generation’s global-equity fund was 12.1 percent a year, which is more than 5% greater than the MSCI index’s growth rate. Among the over200 global-equity managers in Mercer’s survey, Generation’s 10-year average ranked as second.</p> <p>Gore is not shy about discussing his firm’s success. “I wanted us to start talking when the five-year returns were in, but cooler heads persuaded me that we should wait until now,” he noted</p> <p>The Generation team is not, however, bragging to try and drum up new business. Gore and the Generation team are rather aiming at a relatively small audience within the financial world that controls the flow of capital, and at the politicians that set the rules for the financial system. “It turns out that in capitalism, the people with the real influence are the ones with capital!,” Gore said in an interview with The Atlantic earlier this year. They hope that Generation’s success will bring attention to the fact that they can make more money if they change their practices to largely avoid the environmental and social damage modern capitalism can do.</p> <p>This article was originally published by </p>
Career Insights: Shaped by the financial crisis, millennial bond manager readies for rate hike
Asset Management
Andrew Szczurowski is the new breed of bond manager: For the bulk of his career, interest rates have hovered near zero. Szczurowski is one of many millennials who came charging onto Wall Street just as the markets crested, joining Eaton Vance in 2007 after two years at BNY Mellon.  Mortgages, of course, were ground zero for the crisis. Szczurowski, who
What we're reading: fantasy falters but reality inspires hope
Lifestyle, 4:01
<p>A warning for bubble investors, a disgruntled banker, a cure for ISIS, a list to reflect on and a happy tale of human resilience.</p> <p>The fantastic rise and fall of daily fantasy sports: A salutary lesson for venture capitalists as the FBI and US Justice Department investigate the business models of FanDuel and DraftKings. A relentless pursuit of customers with the promise of huge prizes, all funded by investors frightened about being left behind. The Wall Street Journal</p> <p>Another banker in court, but this one thinks he was screwed. A Dutch derivatives trader tells a British employment tribunal that he was fired so his boss could take the credit for his idea to save Barclays £51.5 million and boost his own bonus. Who would’ve thought that such machinations take place in the City? The Daily Telegraph</p> <p>Blocking financing to ISIS. Efforts to train and equip anti-Islamic State fighters have failed, so the U.S. and the West need to focus on choking financial support for ISIS. Nothing else has worked and besides, military action has been mired in confused objectives and has fuelled the misery for Syrians. Funding could well be ISIS’s Achilles Heel. The New York Times</p> <p>10 things you can’t live without. Okay, unlike the author my life would not be impaired by the absence of polka dots or red lipstick, but the list gives pause for thought. Even better, try to compile your top-ten without including anything techy. The Huffington Post</p> <p>Young Spanish entrepreneurs show creativity and initiative. Despite economic crisis and massive unemployment, the youth of Andalucía are combining new technology with old traditions to make their way. Time for the tourists to return and enjoy the beaches while gorging on locally produced food. The Spectator<br /> Photo: Hartwig HKD</p>
Opportunities for Asia's private bankers
Asset Management
<p>Asia’s wealth management scene is competitive, fluid and expensive. Cost-to-income ratios in Hong Kong are more than 70%, almost double the proportion in Western Europe, as blue chip private banks fish for talent in a small pool of relationship managers with networks among China’s new rich.</p> <p>The bait is a big salary and juicy benefits; the reward for the banks are connections to the world’s fastest growing market of high net worth individuals, according to the latest Capgemini and RBC Wealth Report 2015.</p> <p>However, single- and multi-family offices are gaining traction within Asia, undermining the strategies of the leading banks who argue that scalability is essential to survive. Experienced staff see an opportunity to use their contacts to set up on their own or join a niche, more focussed firm with a realistic expectation of even higher compensation as well as greater independence.</p> <p>Kenneth Ho, the former head of Julius Baer’s investment solutions group in Asia Pacific is the latest high profile banker to make the move. At the beginning of this month, he joined US-based Carret Asset Management where he is tasked to set up an Asian multi-family office, reports AsianInvestor.</p> <p>He is looking to buy independent asset managers in Hong Kong and Singapore, and might also form a private equity fund.</p> <p>In September, another private banking veteran, Stephen Repkow quit Union Bancaire Privée to launch an independent platform in Singapore that will serve both as an external asset manager and a multi-family office.</p> <p>If more bankers strike out for independence then, of course, the talent pool for the big wealth managers will become even shallower. They will have to offer larger salaries and bonuses which will push the cost-to-income ratio higher so that eventually head office must wonder: why bother?<br /> Photo: Mart</p>
China's taste for red
Lifestyle, 4:01
<p>Everyone knows that a Parisian instinctively reaches for a bottle of Merlot to quench his thirst and that French babies are weaned on the juice. But, astonishingly France is no longer the biggest consumer of red wine.</p> <p>Last year, the Chinese overtook the French, guzzling almost 1.9 billion bottles of plonk and are now set to become the world’s leading winemakers, according to The Little Red Book published by Week in China.</p> <p>“Xi Jinping’s campaign against free-spending officials has hit China’s fine wine salesmen hard, with purchases of expensive bottles all but drying up. But there’s a silver lining to the slowdown as millions more consumers choose to drink more affordable wine for the first time,” say the authors.</p> <p>The boom in the best vintages is apparently subsiding, and the industry is now excited by the start of a new era for wine in China as drinkers opt for cheaper – and no doubt more hangover-inducing - brands.</p> <p>And China’s much reported anxiety about food security and farmland scarcity seems to subside after a couple of glasses.</p> <p>The Chinese have more than doubled the amount land devoted to the vine during the past 15 years and claim to have almost 11% of the global grape area, according to the International Organization of Vine and Wine.</p> <p>But, like China’s GDP figures, these numbers are a bit misleading. A large portion of the country’s new vineyards hasn’t reached production and much of the harvest in the short-term is likely to end up as table grapes and raisins.</p> <p>So that’s good news for international wine firms. Ganbei.<br /> Photo: F Delventhal</p>
Weekend Scan: Risk on pushes major bourses higher; Europe's refugee crisis worsens
Capital Markets
<p>October 17, 2015</p> <p>Good day.</p> <p>Major world stock markets enjoyed strong gains throughout the week, closing at two-month highs on Friday. Investors absorbed a raft of quarterly earnings announcements in the US which in the end contained few negative surprises. Earlier caution gave way to confidence, boosting share prices on most global bourses.</p> <p>China A-shares were the stellar performer, surging more than 6% during the week on hopes of further stimulus measures. The same expectation in Japan too pushed the Nikkei 225 index over 3% higher.</p> <p>For a change, traders also turned their attention away from speculation about US interest rates and instead were encouraged by hints from European Central Bank (ECB) officials that they would inject more liquidity into a still moribund European economy.</p> <p>The prospect of further ECB quantitative easing provided support for the US dollar against both the euro and the yen. Meanwhile, oil prices staged a rally as traders covered short positions</p> <p>Stocks in major world markets rose to a two-month high on Friday and the dollar ticked up, boosted by views that the European Central Bank may provide more stimulus to the euro zone economy.</p> <p>Here’s what else is happening in the world:</p> <p>Hungary closes its border with Croatia to stem migrant flow. Europe’s refugee crisis continues with Hungary erecting razor wire fences against the tide of hapless people escaping from worn-torn Syria and Iraq. Hungary has been the gateway to their transit to Germany and Austria, and Croatia says it will now direct them to Slovenia instead. BBC </p> <p>Palestinian-Israeli fighting ignites again. After weeks of  fighting between Palestinians and Israeli soldiers that has claimed several lives, a group of Palestinians set fire last night to a compound housing Joseph's Tomb, a Jewish religious site in the West Bank. Both Palestinian and Israeli authorities condemned the act.</p> <p>UN corruption scandal. A US judge set bail at $50 million for Ng Lap Seng, a Macau property tycoon, accused of orchestrating an alleged bribery scheme involving United Nations officials. Prosecutors want to keep him in jail and are considering an appeal because they consider him a flight risk. WSJ (paywall)</p> <p>Europe and Russia plan trip to assess settlement on the Moon. European and Russian space agencies intend to send a robotic lander to the Moon's South Pole to determine the feasibility of permanent settlement. It is not a sci-fi fantasy. Luna 27 will embark in five years’ time and the project’s scientists are confident that in future this largely unexplored area will be an outpost of human civilisation. BBC </p> <p>Barclays plans further investment banking job cuts. The new chief of the UK lender Jes Staley plans to speed up reductions in staff levels in its troubled investment banking business and focus on its “core markets”. Does that mean more branches on UK high streets or simply slashing the wage bill? Financial Times (paywall)</p> <p>Goldman Sachs fires cheating analysts. About 20 analysts have been fired from Goldman's New York and London offices for cheating on internal tests. The tests are firm specific, and not regula</p>
ETF industry needs major reform: SEC’s Aguilar
Asset Management
<p>It looks like the ETF industry is under the gun. Securities and Exchange Commission officials held a meeting of the Investor Advisory Committee in Washington, D.C. on Thursday, and began to lay out the case for reform in the ETF industry. In specific, SEC Commissioner Luis Aguilar outlined the kind of questions they’re asking in their inquiry regarding the rapidly-growing exchange-traded funds market.</p> <p>Questions about the ETF industry began to emerge after August 24th, an extremely volatile trading day and he worst session for U.S. stocks in four years. August 24th witnessed multiple halts in both stocks and ETFs, stoppages that short-circuited the arbitrage mechanism of ETFs and led to ETF prices plunging well below the indexes they’re designed to track for a short period of time. The major glitch in the system was a painful lesson for investors and has brought regulators attention to a number of problems with overlapping market rules implemented following the 2010 “flash crash”.</p> <p>Statement from SEC Commissioner Aguilar about ETFs<br /> Commissioner Aguilar did not beat around the bush in his speech at the SEC committee meeting. He made his agenda clear in his introduction: “Why ETFs proved so fragile that morning raises many questions, and suggests that it may be time to reexamine the entire ETF ecosystem.”</p> <p>In his remarks, Aguilar raised four general questions about the events of August 24th.</p> <p>1) Should ETFs have industry-specific volatility curbs? Do so-called limit up/limit down volatility bands need to be updated? Should market-wide circuit breakers factor in the number of securities that are currently halted?</p> <p>2) Should rules for “clearly erroneous” trades be reformed?</p> <p>3) What roles should exchanges have in ETF trading?<br /> 4) How can market makers be more incentivized to stay in the market during times of extreme volatility?</p> <p>Democratic SEC Commissioner Aguilar also went on to argue that the commission needed to ask bigger, even existential questions about the ETF industry and its very rapid growth, including the issue of whether the growth needed to be curtailed. Here, he outlined four general areas for consideration:</p> <p> How does the growth of ETFs and their gradual movement into less liquid asset classes challenge the effectiveness of the ETF arbitrage and pricing mechanisms?<br /> Are sophisticated traders able to exploit inefficiencies in the pricing mechanisms of less liquid ETFs and exploit retail investors?<br /> Should alternative pricing methods for less-liquid ETFs, such as so-called NAV-based trading, where ETFs are traded at a specific premium or discount to the ETF’s net asset value, be allowed?<br /> Should the growth of ETFs be limited to protect investors and the entir</p>
Seasonal style tips from Savile Row legendary tailor
Lifestyle, 4:01
<p>How does the world remember Paul Wolfovitz from the World Bank? What first came to your mind after seeing his name? Holes in his socks that were exposed during his visit to a mosque in Edirne, Turkey?</p> <p>Of course he did a lot to fight poverty around the globe, but because of the staggering contrast of his high up position vs. poor wardrobe maintenance, he remains a subject of jokes about a banker with holes in his socks, putting into question his professional abilities, writes FinBuzz.</p> <p>It’s no secret that one’s wardrobe should reflect professional achievements, but how to achieve that if you have no time to learn about style?</p> <p>Brian Lishak, co-founder of the bespoke tailoring house Richard Anderson at 13 Savile Row tells you exactly what to wear this season to look at your best.</p> <p>Cut is everything</p> <p>“First of all, I need to say that Savile Row is not about trends, it is about making a man look his best using special cut and colour combinations”.</p> <p>That’s why when you enter Brian’s atelier, you will be asked questions about your lifestyle and business style, measured and photographed. That kind of research ensures the final product is right just for you.</p> <p>“Fashion Industry will sell you a trend,” says Brian, who worked at Huntsman from 1956 till 2001. “But our job at Savile Row is to make a man look as slim and tall as possible. Each client is different and we always look at a man’s size, habits, complexion, lifestyle and business style to guarantee he gets what is good for his personal ways, at the same time achieving as much of the trendy lean and hungry look as we possibly can.”</p> <p>Japanese Denim</p> <p>However, there are some trends that today’s men follow anyway and Brian simply offers the best products on the market.</p> <p>“Modern men often prefer to wear jeans and a smart jacket, while in the past smart jackets would always go with smart pants”.</p> <p>A few years ago, when the jeans trend began, Richard Anderson Ltd started searching for true denim and it led them to… Kurashiki! It is a well-known fact that denim was popularised in the USA, however when the love affair with American culture reached Japan in 1955, many Japanese businesses started to produce own denim and innovate. The company in Kurashiki went to Nîmes, France, where denim was originally produced by the Andre family, and bought the original denim-producing machines. They brought the machines back to Japan and up to this day produce a traditional raw vegetable-dyed indigo selvedge denim, which Brian uses for jeans and jackets.</p> <p>“Japanese denim is arguably the best one the world now. There at Kurashiki they make for us special jeans that are cut by our designs. The trick is — we cut them slightly tight on the upper part of the leg and straight down from the knee. That makes our jeans compliment every figure.”</p> <p>Pants and Shirts</p> <p>“We also make special narrow corduroy trousers in ruby red, russet, brick orange and navy blue. Combined with sport designer shirts or light wool crewneck sweaters they help to easily achieve modern British stylish look.”</p> <p>“As for the shirts — light blue is a universal colour. 50% of all shirts we sell are light blue, which is so easy to wear. However a lot of people still like pale pink and pale violet, which we make too. The only difference of our shirts is the wide-spread collar. That gives more space for the tie”.</p> <p>Controlled Ties</p> <p>For two years narrow lapels were in</p>
Daily Scan: Stocks end week with gains; Goldman fires analysts for cheating
Capital Markets
<p>October 16</p> <p>Good evening. Stock rose Friday, ending the week on a positive note for the third straight week. The Dow grew 0.4% Friday. The Nasdaq added 0.3% and the S&amp;P 500 gained 0.5%. Stock options expired today in the U.S., which normally spells a fall for stocks. Earnings season has kicked off with rocky results, but don't seem to be quite as disappointing as anticipated. European stocks also rose with the Stoxx Europe gaining 0.6%.</p> <p>Here’s what else you need to know:</p> <p>Goldman Sachs fires cheating analysts. About 20 analysts have been fired from Goldman's New York and London offices for cheating on internal tests. The tests are firm specific, and not regulatory exams. CNN</p> <p>Trump suggests Bush could have stopped 9/11. Presidential candidate Donald Trump suggested Friday that former President George Bush failed to stop terrorist attacks. "When you talk about George Bush, I mean, say what you want. The World Trade Center came down during his time," he said. Needless to say, Trump's 2016 rival and Bush brother Jeb responded with disgust. New York Times</p> <p>United CEO hospitalized. The 56-year-old Oscar Munoz was named CEO of the airline last month. The airline did not confirm whether Munoz had suffered a heart attack, as rumored, but the stock fell 3.1% Friday with the news. Reuters</p> <p>FIFA is at it again. A new report shows that Germany likely only hosted the 2006 World Cup because of bribes. The report alleges that four FIFA execs were paid for their votes, and that FIFA helped launder the money. DeadSpin</p> <p>U.S. industrial production drops. Industrial production fell in September for the second straight month, dropping 0.2%, as expected. The August decline was revised to a 0.1% fall. CNBC</p> <p>JOLTS report shows job openings down. The quits rate has held steady at 1.9% for the fifth consecutive month. Job openings in August were at 5.6 million, down from the adjusted 5.67 million in July. Business Insider</p> <p>GE surprises with better-than-expected earnings. Boosted by better aviation and transportation earnings, General Electric reported a profit of $2.51 billion, or 25 cents a share, last quarter. Excluding the finance business, which GE is moving to cut, the company had revenue of $27.9 billion, on a profit of 29 cents a share. Wall Street Journal</p> <p>Theranos backs away from much vaunted "nanotainer" tests. After an inspection by the Federal Drug Administration, the hot startup (company valuation $9 billion) is now able to use the assay to test just one condition -- not the 100 originally publicized. </p>
People Moves: Nuveen builds ETF business; Voya poaches JP Morgan exec
Asset Management
Nuveen building ETF business. Nuveen Investments has hired Martin Kremenstein for the newly created role of head of ETFs. Kremenstein will report to Greg Bottjer, head of product strategy. Kremenstein most recently worked as managing director for asset and wealth management at Deutsche Bank, helping establish the firm's US ETF business. Voya grabs JP Morgan exec. Karen Eisenbach has joined