Brief : Lazard Ltd. Chief Executive Officer Ken Jacobs is looking to take advantage of disruptions in the market by acquiring hedge fund teams and long-only investor groups. “We see a lot of opportunity there,” Jacobs said Friday in a telephone interview after his firm reported first-quarter results. The CEO said he sees a chance to gain in the alternatives business “by consolidating some of the smaller teams that are out there.” Lazard’s assets under management jumped 37% in the first quarter from a year earlier, to $265 billion, driven by a rebound in the markets, according to a statement. The firm generates about half its revenue from managing money and the rest from providing financial advice on mergers, acquisitions and restructurings. Jacobs said Lazard has been adding at least one investment group each quarter, while also actively hiring more M&A dealmakers at the senior level. Dealmaking is also rebounding, he said. As for large acquisitions in asset management, “we really like our position in our business today,” he said. “I’d never say never to anything, we’re inherently, at our core, dealmakers.” Lazard gained 9.8% this year through Thursday, compared with a 12% rise in the S&P 500.
Brief: Europe's economy shrank 0.6% in the first three months of the year as slow vaccine rollouts and extended lockdowns delayed a hoped-for recovery - and underlined how the region is lagging other major economies in rebounding from the coronavirus pandemic. The fall in output for the 19 countries that use the euro currency was smaller than the 1% contraction expected by economists but still far short of the rebound underway in the United States and China, two other pillars of the global economy. Figures announced Thursday showed the U.S. economy grew 1.6% during the first quarter, with business supported by strong consumer demand. On an annualized basis, the U.S. grew 6.4%. In Europe, it was the second straight quarter of falling output, meaning the region fell back into a recession despite a rebound in growth from July to September of last year. The latest data covers the quarter that ended March 31 and economists say the economy is on the verge of an upswing. France showed unexpected growth of 0.4% compared to the quarter before, while the main negative surprise came in Germany, the continent's largest economy.
Brief: Despite a 71-basis-point drop in the average discount rate contributing to a 7.7% rise in aggregate liabilities, Pensions & Investments' annual analysis of SEC filings showed a 1-percentage-point increase in the average funding ratio of the 100 largest U.S. corporate defined benefit plans in 2020. "If you didn't know what happened in between, you wouldn't have seen too much change year-over-year from 2019 to 2020, with funded status ending right around where it started. But a lot did happen," said Tom Meyers, executive director and head of Americas client solutions at Aviva InvestorsAmericas LLC in Chicago. As of March 31, 2020, Wilshire Consulting estimated the aggregate funding level of S&P 500 company-sponsored pension plans at 79.2%, a 9.4-percentage-point decrease from the end of 2019. However, the aggregate funding ratio of P&I's universe was 88.4% as of Dec. 31, which Mr. Meyers said "reflects the magnitude of the capital markets recovery." The average funding ratio of the 100 largest plans was 92%, up from 91% the year before. As plans recovered from the drop in funded status and the market dislocations that followed the onset of the pandemic last spring, Mr. Meyers said well-positioned plans made opportunistic moves, such as selling Treasuries to increase corporate bond exposures at higher spreads and investing in alternative asset classes like commercial real estate, private credit or high yield that were under pressure during the crisis.
Brief: Amusement parks tickets. Business-class plane reservations. Drive-thru traffic at McDonald’s. Now more than ever, investors are leaning on real-time data to buttress their bullishness on the U.S. stock market. They’re sifting through an ever-widening array of snapshots at a time when some government figures are being distorted by year-ago comparisons to an economy hobbled by a recession. Of course, no one needs esoteric datasets to see that the U.S. -- once the epicenter of the pandemic -- is on the mend, notes Paul Hickey, co-founder of Bespoke Investment Group. Deaths are down, vaccinations are up and consumers are spending again. But with the snap-back recovery in the books and stocks perched at the highest valuations in two decades, the hunt is on for indicators to fine-tune the bull case -- or uncover an early warning signal to get out before being blindsided by a crash. The following is a rundown of what market pros say they’re watching.
Brief: An ASIC review of a targeted selection of retail managed funds found that they did not face serious investor liquidity challenges during the height of COVID-19 market disruption, and that their liquidity frameworks were generally adequate. While there was a significant drop in net investor cashflow in the first half of 2020, responsible entities of these funds did not tighten members’ ability to withdraw their investments. ASIC conducted the review between June and November 2020 to identify any potential liquidity issues faced by managed funds and respond to those if necessary. The review covered 14 registered funds across three different strategies (four mortgage, five direct property and five fixed income funds) with an aggregate of $1.7 billion in assets under management and approximately 8,500 investors. ASIC selected funds that it considered were at risk of facing liquidity issues due to a mismatch between investors’ expectations or potential desire to exit and the liquidity of the fund assets in a financially stressed market.
Brief: IPO activity in the US had the strongest first quarter in the year 2021, continuing the strong momentum seen in the second half of the year. According to the research data analysed and published by Finaria, 389 US-based IPOs raised a total of USD125 billion in Q1 2021, up from the 33 issuances that raised USD10 billion in Q1 2020. From this total, there were 298 SPAC deals raising a collective USD87 billion. That was higher than the amount raised in the whole of 2020. On the global landscape, proceeds from traditional IPOs set a five-year record. Based on a report by KPMG, 458 issuances raised USD96 billion in the period which ended on 24 March, 2021. That was up from 252 deals that raised USD30 billion in Q1 2020. US, Hong Kong and A-Share Markets Lead with USD61.4 Billion from Traditional IPOs, 63 per cent of Global Total In the US, the total number of SPACs in Q1 2021 was thrice the figure posted in Q3 2020, which was when the trend became popular. In Q1 2021, there were only 91 traditional IPOs in the country, raising USD38 billion. For the 24 SPACs that completed mergers during the quarter, there was a 27 per cent return. Traditional IPOs, on the other hand, had a 15 per cent return while key indices, S&P 500 and NASDAQ gained 6 per cent and 3 per cent, respectively.