Brief : Federal Reserve Bank of St. Louis President James Bullard said that getting three-quarters of Americans vaccinated would be a signal that the Covid-19 crisis was ending, a necessary condition for the central bank to consider tapering its bond-buying program. “It’s too early to talk about changing monetary policy,” Bullard said in an interview with Bloomberg Television’s Kathleen Hays Monday. “We want to stay with our very easy monetary policy while we are still in the pandemic tunnel. If we get to the end of the tunnel, it will be time to start assessing where we want to go next.” About 36% of Americans had been given a first vaccine dose and 22% were fully vaccinated, according to the Bloomberg Vaccine Tracker. Centers for Disease Control and Prevention officials have urged Americans to continue to take safeguards, including restricting their travel, with the number of cases rising. “When you start to get to 75% vaccinated, 80% vaccinated and CDC starts to give more hopeful messages that we are bringing this under better control and starts relaxing some of their guidelines, then I think the whole economy will gain confidence from that,” Bullard said.
Brief: Goldman Sachs Group Inc executives are examining how well the bank navigated several major market events this year that caused extreme volatility, people familiar with the matter told Reuters. The review will include a market-wide fire sale of stocks triggered by Archegos Capital Management’s default on margin calls at banks including Goldman, the sources said. The meltdown of Archegos, a New York investment fund run by former Tiger Asia manager Bill Hwang, has sent shock waves across Wall Street and drawn regulatory scrutiny in three continents. Goldman Sachs is also looking more broadly at how it handled recent market events, with a particular lens on compliance and best practices, the sources said. That could include what happened during the Reddit-fueled trading frenzy in equity markets, including shares of GameStop Corp, as well as the U.S. Federal Reserve’s decision to end pandemic-related capital relief for banks, which caused issues in fixed-income markets. Also this year, there was chaos in energy markets in mid-February after a deep freeze in Texas sent the cost of fuel and power sky-high.
Brief: United Nations Secretary-General Antonio Guterres is calling on nations to institute a wealth tax to help reduce global inequality exacerbated by the Covid-19 pandemic. There has been a $5 trillion surge in the wealth of the world’s richest in the past year even as those at the bottom were made increasingly vulnerable, Guterres told a UN economic and social forum on Monday. “I urge governments to consider a solidarity or wealth tax on those who have profited during the pandemic, to reduce extreme inequalities,” he said. “We need a new social contract, based on solidarity and investments in education, decent and green jobs, social protection, and health systems. This is the foundation for sustainable and inclusive development.” With the Covid-19 fallout causing government debt to swell, and hurting poorer people most, wealth taxes are being debated from California to the U.K. as a tool both to pay down debt and address inequality. U.S. Senator Elizabeth Warren, Nobel laureate Joseph Stiglitz and economist Thomas Piketty are among proponents. In the U.S., Warren, along with Representatives Pramila Jayapal and Brendan Boyle, have proposed a 2% annual tax on households and trusts valued at between $50 million and $1 billion, though the measure is unlikely to garner the support needed to pass, particularly in the evenly divided Senate.
Brief: The Ontario Securities Commission (OSC) today released a new study that explores the impact of the pandemic on the behaviours and attitudes of retail investors. This study is part of the OSC’s ongoing efforts to monitor the impact of the pandemic on investors and markets. The COVID-19 pandemic has uniquely affected the financial situation of each retail investor. Most investors are simply trying to endure the hardship and uncertainty of the pandemic, but some see it as an opportunity to increase their participation in the capital markets. “We continue to see the uneven impact that this crisis is having on retail investors,” said Tyler Fleming, Director of the Investor Office at the OSC. “Understanding how the pandemic is affecting different segments of the population is essential for supporting retail investors during this difficult time.”
Brief: Hedge fund managers are feeling optimistic about their economic prospects over the next 12 months. In a recent survey, 90 percent of hedge funds reported a positive outlook for their firms’ futures, according to the Hedge Fund Confidence Index, a global index produced by the Alternative Investment Management Association with law firms Simmons & Simmons and Seward & Kissel. The HFCI was based on a poll over 300 hedge funds across the globe, accounting for approximately $1 trillion in assets, during the first quarter of 2021. Respondents were asked to rate their economic confidence levels on scale of -50 to +50, with +50 indicating the highest level of confidence. Based on responses, the average measure of confidence was +18 percent, a nearly 40 percent increase from the confidence levels reported last quarter. “Hedge funds appear to be riding a wave of optimism sweeping the globe as it moves closer to exiting the pandemic,” the group said in the report. The report attributes much of this “cautious optimism” to the increased distribution of Covid-19 vaccinations and the slow lifting of pandemic-related economic restrictions. In the first three months of 2021, hedge funds have also seen a “solid set of results,” returning 6 percent net of fees for the year as of March 2021, according to the report.
Brief: Singapore’s largest companies missed a collective target to get more women on their boards, with diversity efforts taking a backseat to combating the coronavirus pandemic. The proportion of women on the boards of the 100 biggest listed companies rose 1.4 percentage points to 17.6% as of end-2020 from a year earlier, according to the Council for Board Diversity. The target was 20%. Some companies didn’t view board diversity as a priority last year as they battled the global outbreak, the council said. “Board diversity, a recognized hallmark of progressive boards even before Covid-19, is more critical now than before,” Loh Boon Chye, co-chair of the council, said in a statement. “Post-pandemic recovery offers opportunities for innovation and business repositioning. Having directors with a wider mix of gender, age, skills, experiences, and backgrounds allows boards the broad-based choices as they assess what is best for the future.” The percentage of top companies with 30% or more women on their boards rose to 16% in 2020 from 12% the year before, the report showed. There were still 18 all-male boards in 2020, and only seven of the top 100 firms were chaired by women.
Brief : The guardians of the global economy this week implored governments to act to avoid a two-speed rebound where vaccinated, rich nations recover more strongly from the pandemic than poorer countries languishing under the burden of disease and debt. The International Monetary Fund said that it sees the U.S., as well as China, as the locomotive for global economic growth. The world’s largest economy, fueled by trillions of dollars in stimulus spending, is expected next year to surpass its pre-pandemic projected level of output. But many emerging and developing economies, struggling with slow growth and mountains of debt, will take much longer. The central theme of the IMF’s virtual spring meetings with the World Bank was “giving everyone a fair shot” -- a slogan that underlined both concerns about inequality and the importance of speeding up the distribution of vaccines globally.
Brief: Hedge funds have made their strongest first-quarter start in more than 20 years, gaining more than 6 per cent in the three-month period to the end of March, with returns powered by a mix of successful calls on deep value equities amid accelerated volatility, renewed economic optimism, and soaring cryptocurrencies. Hedge Fund Research’s main Fund Weighed Composite Index, a global, equal-weighted benchmark of some 1400 single-manager hedge funds, advanced 6.08 per cent in Q1, following a 1.02 per cent gain in March. The March gain proved to be its sixth consecutive monthly rise, with Q1 its best opening quarter since 2000, and the index’s fifth-best opening quarter on record. HFR president Kenneth Heinz said deep value, event-driven equities, coupled with credit strategies – including traditional credit arbitrage exposures – and cryptocurrencies have helped fuel industry gains lately, as performance dispersion between winners and losers continues to narrow. Overall, event driven hedge fund managers led the pack, gaining 1.85 per cent in March to put their first quarter return at 8.21 per cent.
Brief: As U.S. business aviation traffic rebounds to pre-pandemic levels, a niche, fragmented industry providing services ranging from hangars to fueling is drawing interest from private equity funds and infrastructure investors. Fixed base operators, or FBOs, play a key role in keeping private jets flying, offering services like hangars and fueling, and some buyers are betting the revival in flights could spill over into allied industries. While business jet orders and deliveries dropped in 2020, private flights, which carry smaller groups and promise wealthy passengers less risk of exposure to the coronavirus, have generally fared better than commercial. That is underpinning investor interest in FBOs. The sector recently made headlines when Gatwick Airport owner Global Infrastructure Partners joined forces with Blackstone and Bill Gates’ investment vehicle to make a $4.73 billion offer for Signature Aviation, the largest private jet services firm. There are other deals brewing too. Macquarie Infrastructure Corp has said it is seeking buyers for Atlantic Aviation, the second-largest FBO network, for a deal by year’s end.
Brief: Enough vaccines have now been administered to fully vaccinate about 5 per cent of the global population — but the distribution has been lopsided. Most vaccines are going to the wealthiest countries. As of Thursday, 40 per cent of the COVID-19 vaccines administered globally have gone to people in 27 wealthy nations that represent 11 per cent of the global population. Countries making up the least-wealthy 11 per cent have gotten just 1.6 per cent of COVID-19 vaccines administered so far, according to an analysis of data collected by the Bloomberg Vaccine Tracker. In other words, countries with the highest incomes are vaccinating 25 times faster than those with the lowest. Bloomberg’s database of COVID-19 vaccinations has tracked more than 726 million doses administered in 154 countries. As part of our effort to assess vaccine access around the world, the tracker has a new interactive tool measuring countries by wealth, population and access to vaccines.
Brief: Initially sideswiped by Covid-19 in early 2020, private credit markets began to bounce back by year’s end, leaving dealmakers optimistic that private credit might fully rebound in 2021. According to a new survey of 112 private credit industry professionals conducted in February, 91 per cent of investors and 80 per cent of lenders surveyed expect deal flow to increase this year and are optimistic about several deal categories and sectors. For the 2021 Private Credit Survey Report, Katten surveyed an almost-equal weighting of lenders and private equity investors. Those surveyed represent a variety of sectors (including financial services, information technology, consumer staples, communications, industrials and health care) about their outlook on deal flow, readiness to address the London Inter-Bank Offered Rate (LIBOR) phaseout and other issues critical to the private credit industry.
Brief: The research output of equity analysts went up dramatically during the Covid-19 pandemic — but the accuracy of their forecasts went down, according to a new study from the University of London’s Cass Business School. Compared to the pre-pandemic months, analyst forecasts for company earnings per share, or EPS, increased by 72 percent in March 2020, indicating that sell-side analysts’ “initial response to pandemic-induced market uncertainty is to increase their provision of information,” according to the study’s author Pawel Bilinski, director of the Centre for Financial Analysis and Reporting Research at Cass. For other forecasts, such as revenue, cash flow, and dividend estimates, Bilinksi uncovered a similar pattern. The number of revenue forecasts increased by 80 percent in March, while cash flow forecasts jumped 59 percent and dividend estimates grew by 11 percent, according to the paper. The study was based on over 400,000 EPS forecasts and revenue, cash flow, and dividend estimates made by sell-side analysts from January 2018 to November 2020. The increase in research activity came as the Covid-19 pandemic sent a series of shock waves rippling through the global economy, creating an uncertain and volatile market environment.
Brief : Jerome Powell pledged to get the U.S. back to a “great economy” and invoked a homeless encampment in downtown Washington to make the point that the recovery remains incomplete. Playing down the risk that inflation could get out of control as the pandemic recedes, the Federal Reserve chair told a virtual panel Thursday that his commute home takes him past a “substantial tent city,” and that he thought of the millions of Americans who are still trying to get back to work. “So we just need to keep reminding ourselves that even though some parts of the economy are just doing great, there’s a very large group of people who are not,” he said during the International Monetary Fund panel. “I really want to finish the job and get back to a great economy.” Fed officials have repeatedly stressed that the U.S. economy continues to need aggressive monetary policy support as it recovers from the pandemic, even as the outlook brightens amid widening vaccinations
Brief: UK investors added record levels of capital to equity funds in March as they bet on the post-Covid economic recovery, according to the latest data from funds transaction network Calastone. In total, UK investors committed a net £2.96 billion (€3.42 billion) to equity funds surpassing the previous record seen in the post-crash bounce of April 2020 by over a tenth, the firm said. UK-focused equity funds saw a net £610 million added to holdings marking a "startling" turnaround for the asset class, while global equity funds took in £1.84 billion. Meanwhile, global ESG equity funds attracted new capital to the tune of £1.15 billion. Edward Glyn, head of global markets at Calastone highlighted that equity fund managers have enjoyed their best ISA (Individual Savings Accounts) season in years. “New capital has flooded in from investors keen to capitalise on the post-Covid economic recovery,” he said. Active funds took in the lion’s share of investment, attracting over three quarters of overall net inflows (£2.32 billion). It was their best monthly performance since July 2015.
Brief: The distribution of COVID-19 vaccines is fueling optimism that Americans will increasingly return to the ways they used to shop, travel and work before the pandemic. That would be a welcome change for companies that own office buildings and hotels, or those that lease space to restaurants, bars, department stores and other retailers. These have been the hardest-hit areas of commercial real estate over the past year as the pandemic forced many businesses to shut down temporarily or operate on a limited basis. But even as the U.S. economy appears set to roar back to life this year, as many economists now predict, demand trends for commercial real estate could take longer to recover as businesses reassess their post-pandemic needs. This means higher vacancy rates and declining rents this year, especially for retail and office property owners, said Thomas LaSalvia, senior economist with Moody’s Analytics.
Brief: The rise of sustainable finance, the impact of Brexit, EU regulation and the fallout of the pandemic all have the potential to shape considerations around alternative fund domicile selection, according to new research published this month by IFI Global and supported by Jersey Finance. Based on the views of alternative managers, law firms and advisors from across North America, Europe and Australasia, including some of the world’s largest investors in alternatives, the research for this new report – entitled ‘The Future of International Fund Domiciliation 2021’ – was carried out between October 2020 and February 2021. Building on the first IFI Global report in this series, published in April 2020, which found that investors and managers want stability when it comes to fund domiciliation, this new report explores how investor and manager attitudes have changed in light of some key developments in the investment space landscape over the past twelve months, including ESG acceleration, Brexit and regulation. Overall, the survey found that investors continue to be the key driver behind domiciliation decisions, and they want to allocate to funds that are domiciled in well-known jurisdictions that have a good reputation.
Brief: Royal Bank of Canada is giving employees an extra paid day off this year, and its top executive acknowledged that staff are more burned out now than at any time during the COVID-19 pandemic. Chief Executive Officer Dave McKay said in companywide memo on Thursday that many employees have said they’re exhausted and that the bank needs to “eliminate the stigma associated with asking for time to focus, concentrate, and in some cases, log off and recharge.” Burnout has become a more pressing issue for financial firms as the pandemic moves into its second year and some lines of business, including mergers and acquisitions, see a sustained boom in activity. Last month, Goldman Sachs Group Inc. CEO David Solomon said the firm would improve enforcement of a rule designed to ensure junior bankers don’t have to work on Saturdays. His memo came after junior analysts gave managers a presentation showing that some worked 100 hours in a week. RBC, Canada’s largest lender, is also giving its roughly 86,000 employees worldwide a free, one-year subscription to Headspace, a meditation and sleep app. An annual subscription costs US$69.99, according to Headspace’s website.
Brief: Former Schroders COO Markus Ruetimann has called on fund managers to use the pandemic to assemble a more diversified workforce with greater emphasis on IT specialists and data scientists. Writing in the latest edition of the FundsTech quarterly report, Ruetimann stated that the move to remote working had shown the need for “new, more inclusive hierarchical structures and communication channels”. “Future talent pools will need diversifying. IT pioneers and data scientists are likely to play a bigger role than fund managers and data administrators going forward,” stated Ruetimann, chief executive of advisory practice Hardy London and also chair of Aprexo, a data management provider. However, while the institutional asset management industry has talked about the need to reinvent itself in view of the ever-expanding digital economy, few firms have replaced their legacy systems with new technology or hired talent from outside the industry to cater for a more tech and data-dominated operating environment.
Brief : BlackRock Inc. Chief Executive Officer Larry Fink said the thing he looks forward to most in the post-pandemic world is meeting with clients again, as the U.S. vaccination campaign continues and companies weigh how to unwind remote work setups. In his annual letter to shareholders, Fink said that there is no substitute for in-person meetings. His comments add to earlier remarks that he fears corporate culture can erode over time while working from home. “I miss the personal connections and unexpected ideas that come from meeting face-to-face and sharing a meal together,” Fink said Wednesday in the letter. “It’s often through a less structured conversation than one can have on a video call that we learn most about each other and experience intangibles, like culture, that are hard to see through a screen.” More than a year into the Covid-19 pandemic, global financial firms like BlackRock are deciding how to safely bring employees back to in-person work settings. BlackRock executives last year signaled the office will remain the primary work location for employees in the long term, and full-time remote work permission will be given only selectively.
Brief: JPMorgan Chase & Co Chief Executive Officer Jamie Dimon said on Wednesday the United States could be in store for an economic boom through 2023 if more adults get vaccinated and federal spending continues. “I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE (quantitative easing), a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom,” Dimon wrote in his annual letter to shareholders published on the bank’s website. “This boom could easily run into 2023 because all the spending could extend well into 2023.” As head of the biggest U.S. bank, Dimon is widely seen as the face of America’s banking sector, and he used the letter to share his views on the country’s economic health and to press for policies to help address inequality and improve the criminal justice system.
Brief: High earners and companies that prospered in the coronavirus crisis should pay additional tax to show solidarity with those who were hit hardest by the pandemic, according to International Monetary Fund. A temporary tax would help to reduce social inequalities that have been exacerbated by the economic and health crisis of the past year, the fund said in its twice-yearly fiscal monitor on Wednesday. It would also reassure those worst affected that the fight against COVID-19 is a collective endeavour within societies. Vitor Gaspar, IMF’s head of fiscal affairs, told the Financial Times that a symbolic rise in taxation from those who have prospered over the past year would strengthen social cohesion even if there was not a pressing need to repair the public finances. Countries should consider this policy as it would help boost their citizens’ perception “that everybody contributes to the effort necessary for recovery from COVID-19,” he said.
Brief: While the “fear gauge” that tracks market volatility has remained at elevated levels since the onset of the pandemic, those who allocate alternative investment dollars for large investors are showing no signs of skittishness, according to the Alternative Investment Allocator Survey conducted by leading law firm Seward & Kissel.The survey found that allocators are likely to increase allocations to less liquid strategies and continue to embrace emerging managers in 2021. The full survey is available here. The survey analyses the views of individuals from pension funds, endowments, family offices, seeders, high-net-worth individuals, and others. Asked how their organisations’ allocations across a wide range of alternative investments would change in 2021, on average 42 per cent of participants anticipated their organisations to increase allocations to at least one strategy and 54 per cent said they would maintain their allocations, while just 4 per cent said their allocations would decrease. The strategies for which participants expect to increase allocations to in 2021 were primarily less liquid strategies typically utilised by closed-end funds with private equity, private credit, and venture capital accounting for the top three of the four strategies of interest for increased allocations, followed by equity hedge.
Brief: The Biden administration is in extended discussions with U.S. airlines and other travel industry groups to provide technical guidance for vaccine passports that could be used to ramp up international air travel safely, industry officials said. The administration has repeatedly made clear it will not require any businesses or Americans to use a digital COVID-19 health credential, however. It will also publish guidelines for the public. The key question, airline and travel industry officials say, is whether the U.S. government will set standards or guidelines to assure foreign governments that data in U.S. traveler digital passports is accurate. There are thousands of different U.S. entities giving COVID-19 vaccines, including drugstores, hospitals and mass vaccination sites. Airline officials say privately that even if the United States does not mandate a COVID-19 digital record, other countries may require it or require all air passengers to be vaccinated.
Brief: In the first 12 months of the COVID-19 pandemic, many large investment funds with environmental, social and governance criteria outperformed the broader market. One fund went from being among the poorest performers to the top of the list following tweaks to its portfolio. S&P Global Market Intelligence analyzed 26 ESG exchange-traded funds and mutual funds with more than $250 million in assets under management. We found that from March 5, 2020 — the month that the World Health Organization officially declared COVID-19 a pandemic — to March 5, 2021, 19 of those funds performed better than the S&P 500. Those outperformers rose between 27.3% and 55% over that period. In comparison, the S&P 500 increased 27.1%. Funds that identify as "ESG-focused" screen for stocks based on value and growth like many other funds, but add various criteria such as ESG-focused governance practices, sustainability scores, disclosure practices, fossil fuel exposure, adherence to religious principles and workplace diversity. Critics of ESG investing often question whether the strategy can deliver premium returns. But ESG fund managers have said their focus on nontraditional risks led to portfolios of companies that so far have been resilient during the COVID-19 downturn.
Brief : The International Monetary Fund (IMF) estimates that without government support through the COVID-19 pandemic last year, the global economic downturn would have been three times as large. A retroactive look from the IMF estimated that fiscal measures from governments around the world contributed about 6% to global growth in 2020, helping to soften a global shock that still contracted output by 3.3% in 2020. The IMF now says the COVID-19 recession is likely to leave a smaller scar on the global economy compared to the 2008 financial crisis. "Overall, the global economy seems to be coming back somewhat stronger than we had expected," IMF Chief Economist Gita Gopinath told Yahoo Finance on Tuesday. Still, the fund is recommending that countries with the ability to spend continue to support policy measures like unemployment insurance and stimulus checks through the economic reopening.
Brief: China will drive global economic growth in the coming years as the world recovers from an pandemic that’s killed 2.9 million people, the International Monetary Fund predicts. China will contribute more than one-fifth of the total increase in the world’s gross domestic product in the five years through 2026, according to Bloomberg calculations based on IMF forecasts published Tuesday. Global GDP is expected to rise by more than $28 trillion to $122 trillion over that period, after falling $2.8 trillion last year in the biggest peacetime shock to output since the Great Depression. The U.S. and India will be the second and third-biggest contributors to global growth in the period, according to the IMF, with Japan and Germany rounding out the top five. Overall, the IMF forecasts that the global economy will expand 6% this year, before slowing toward a 3% pace by 2026. It also warned that growth in the coming expansion may be unevenly spread, with developing economies expected to have bigger losses and slower recoveries. “Income inequality is likely to increase significantly because of the pandemic,” the Fund said in its World Economic Outlook report. “Close to 95 million more people are estimated to have fallen below the threshold of extreme poverty in 2020 compared with pre-pandemic projections.”
Brief: The Covid-19 pandemic shifted the professional world to the online office. Yet despite the demands of the virtual space, only around half of hedge fund managers are spending money on new technology. According to a recent survey from the Alternative Investment Management Association, Simmons & Simmons, and Seward & Kissel, 47 percent of hedge fund managers answered “no” when asked if they were investing in new technologies. Those who answered “yes” are focused on one major trend: alternative data. In the survey, hedge fund managers and investors were asked a series of questions about the health of, and trends in, the hedge fund industry. The survey, which gathered data during the fourth quarter of 2020, asked questions of over 300 industry professionals, a majority of whom were hedge fund managers accounting for an estimated $1.3 trillion in assets under management. “The industry is investing in technology — period,” said Tom Kehoe, managing director and global head of research and communications at AIMA, in an interview. “Across the board, hedge funds were using technology more in the past 12 months. If we look at the next 12 months, our sense is that the industry will double down on the use of technology.”
Brief: Hundreds more JPMorgan Chase & Co. and Goldman Sachs Group Inc. bankers have returned to their London offices since the U.K. government eased its “stay at home” guidance on March 29. About 15% of JPMorgan’s staff in the city -- about 1,800 people -- came into the office last week, up from about 10% since Christmas, according to a person familiar with the matter. Goldman is expecting attendance to increase in the coming weeks to about 20% of its roughly 6,000 workers in the U.K. capital, another person said, asking not to be named discussing private information. Spokespeople for the banks declined to comment. The U.K. is inching out of its third Covid lockdown and banks of all types are looking to establish future working practices. Some financial firms are starting to entice employees back to deserted offices and an empty City of London, while other have moved to embrace remote work. “Organizations need to understand what their employees need and what will enable them to do their best work,” said Allison English, deputy chief executive officer of workplace research firm Leesman. “The decision is certainly not a binary ‘home or office’ one.” The property market is watching the return to work. A 37-storey skyscraper in the heart of the City is being put up for sale for 1.8 billion pounds ($2.5 billion), according to the Telegraph. The price tag -- a record for a London office building -- will be a test of investor appetite for offices following the pandemic.
Brief: UK investment platform provider A J Bell is predicting a significant increase in withdrawals from pension pots compared to the unusual circumstances caused by the Covid pandemic over the last year. In five of the six years since the pension freedoms launched in April 2015, the first three months of the tax year has seen the highest volume of flexible withdrawals. The exception is the 2020/21 tax year, when withdrawals dipped to £2.3bn amid severe stock market uncertainty. Total withdrawals have been between 10% and 33% higher between April and July than the next largest quarter in every other tax year. Tom Selby, senior analyst at AJ Bell, said "While most of us still have fewer things to spend our money on at the moment - particularly given restrictions on foreign travel - the success of the Coronavirus vaccine and more stable market conditions mean we should expect to see a significant jump in withdrawals in the coming quarter." Selby emphasised how until 2020, the beginning of a new tax year has traditionally been peak pension withdrawal season, with UK savers taking advantage of a fresh set of tax allowances to access larger amounts from their retirement pots.
Brief: We are witnessing a sizeable and lasting shift to e-commerce across the economy - a shift that has been underway for decades, entirely catalysed by a single, revolutionary technological advancement - the emergence of the internet. The internet made it possible for businesses and individuals to buy and sell items and services online, and in a very short period, consumers had the convenience of almost unlimited selection available to them from the comfort of their homes, 24/7, with just a few clicks of a button. As it stands today, global e-commerce is an area of tremendous opportunity, as the disruption we see is only just beginning. The effect of Covid-19 on corporate and consumer behaviour has been pronounced and significant. This period has been a tailwind for e-commerce at a level unseen since the advent of mobile phones. For the first time in history, we saw an acceleration in e-commerce adoption despite gross domestic product declining globally. The pandemic has created some of the greatest retail, payment, and distribution challenges in our lifetime. In a matter of months, the pandemic catapulted the industry forward, accelerating the adoption of online shopping, digital communications, website creation and other industry trends at a pace that had previously taken years.
Brief : Bridgewater Associates LP plans to offer employees flexibility as they return to work for the first time since the Covid-19 pandemic began, according to Co-Chief Investment Officer Bob Prince. The firm expects to move toward a blended approach with some staff spending fewer days in the office and offering opportunities for employees to exercise more flexibility, Prince said Thursday in an interview on Bloomberg TV. The Westport, Connecticut-based hedge fund’s current plan is to have everyone in the office one day a week and smaller groups a second day, according to Deputy Chief Executive Officer Nir Bar Dea. The plan will start after Labor Day. The decision is a departure for the firm, which is known for an unorthodox culture that prizes employees working intensely together. Founder Ray Dalio runs the industry giant following a set of about 200 principles, the most central of which is “radical transparency” -- a demand that employees be brutally honest with one another. All meetings are taped and archived for future study and discussion. Prince said having staff work from home has been mixed. “Ironically, in some ways, we’ve been more productive in the last year than we ever were, in other ways less,” he said. “Obviously the culture of a community is very hard to build when you’re not actually seeing each other.”
Brief: Brookfield Asset Management Inc. said it reached a US$6.5 billion agreement to acquire the shares of Brookfield Property Partners LP it doesn’t already own, boosting its offer to take private its real estate arm. The Canadian alternative-asset manager said Thursday it plans to acquire the minority stake for US$18.17 per unit. That would mark a 10 per cent increase to the US$16.50 a unit Brookfield Asset offered in January, and a 26 per cent premium over where the shares traded prior to that earlier proposal. Brookfield Property’s board has unanimously approved the deal, according to the statement by the companies. Brookfield Property dropped 0.8 per cent to US$17.66 as of 10:44 a.m. in New York. Brookfield Property Partners owns, operates and develops one of the largest portfolios of real estate in the world. At the end of December it had about US$88 billion in total assets, including developments such as London’s Canary Wharf and Brookfield Place in New York. In 2018, Brookfield Property acquired GGP Inc., the second-largest mall operator in the U.S., for about US$15 billion. The pandemic has taken a toll on the company as widespread stay-at-home orders kept workers from offices and shoppers from malls. Brookfield Property Partners reported a US$2 billion loss and its shares fell 21 per cent last year.
Brief: Mergers and acquisitions (M&A) activity surged globally in the first quarter of 2021 to a year-to-date record, as companies and investment firms rushed to get ahead of changes in how people work, shop, trade and receive healthcare during the COVID-19 pandemic. While the number of deals was up only 6% from a year ago, the total value of pending and completed deals rose 93% to $1.3 trillion, the second-biggest quarter on record, according to data provider Refinitiv. Dealmakers said a boom in the stock market and low borrowing costs - driven by the Federal Reserve’s loose monetary policies - emboldened companies, private equity funds and blank-check acquisition firms to pursue their dream deals. This is despite the global economy’s failure to have fully recovered as yet from the virus’ financial fallout. “This is as robust and broad-based an M&A market as I have witnessed in the last 20 years,” said Colin Ryan, co-head of Americas M&A at Goldman Sachs Group Inc. “We are in an environment where assets are scarcer than the available capital right now.”
Brief: Hedge funds are “cautiously optimistic” on their growth prospects for the coming year, according to a new deep-dive industry study jointly published by the Alternative Investment Management Association, Simmons & Simmons and Seward & Kissel. ‘The Global Hedge Fund Benchmark Survey: Beyond the Horizon’ probed manager performance, investor sentiment, future challenges, and alignment of interests, among other things. The wide-ranging study is part of an ongoing research series into the health of the hedge fund industry conducted by AIMA, the global trade body for the hedge fund and alternative asset management industry, together with law firms Simmons & Simmons and Seward & Kissel. Its key findings suggest 2021 will see a further acceleration of trends, with the industry becomingly increasingly digitalised and more social conscious, and hedge fund firms playing an integral role in the global economic recovery from the Covid-19 pandemic.
Brief: India seems to have recovered quickly from Covid, and most citizens have been able to go back to their normal lives free from lockdown restrictions, says Jupiter's Avinash Vazirani. The country has reported just 12 deaths per 100,000 population, a much lower figure than, for example, the UK's 189 per 100,000. More than 30 million people in India have been vaccinated so far, with the government hoping to cover the most vulnerable 250 million by the end of July. India is especially well-placed for Covid vaccinations, as the country manufactures around 60% of the world's supply of vaccines. We think that India's world class healthcare and pharmaceutical industry will be a beneficiary of long-term trends for the treatment of and vaccination against Covid. Our outlook is also positive for India's economic growth in general. Economic activity has been trending above pre-Covid levels since January, with Goods & Services Tax (GST) takings up 8% in January, on a year-on-year basis, to a record high. According to the Federation of Indian Chambers of Commerce & Industry (FICCI) business confidence in March is at a decadal high, with companies not only seeing a recovery in demand, but also the potential for higher investment over the coming quarters.
Brief: Over a year into the pandemic, institutional investors are worried about the mental health of their employees. Managing stress and curbing burnout among employees who are working remotely were cited as top concerns in Nuveen’s inaugural global survey of institutional investors, which was released Wednesday. Nuveen, the investment manager of TIAA, has $1.2 trillion in assets under management and operates in 27 countries, according to a press release on the survey results. The asset manager surveyed 700 global investors and consultants including decision-makers at corporate and public pensions, insurance companies, endowments and foundations, superannuation funds, sovereign wealth funds, central banks, and consultants. The organizations represented in the survey held assets ranging from more than $10 billion to no less than $500 million, Nuveen said. When the Covid-19 pandemic changed the nature of work and shifted the investing world to the home office, institutional investors took the change in stride.
Brief : Private equity is already positioning for the next deadly virus. Some buyout firms are seeking new terms in loan agreements to help their companies avoid defaults if earnings drop in a future pandemic, according to lawyers with knowledge of the discussions. They’re getting resistance from banks concerned the proposals allow borrowers too much flexibility and would scare away investors. Fights over the fine print in credit agreements became particularly bitter during the Covid-19 outbreak, with companies strapped for cash as business withered. Those tensions are making creditors wary of giving away any bargaining power. Proposed terms vary, but the most aggressive version would allow a company to exclude the effect of a future pandemic from the calculation of earnings used to determine whether it’s in compliance with creditor covenants. The covenants typically rely on earnings-based financial metrics to determine whether a company can take on additional debt, sell assets or distribute dividends.
Brief: U.S. Treasury Secretary Janet Yellen is facing pressure from Democrats to revive tougher scrutiny of hedge funds and other large pools of capital as she heads her first meeting of the premier grouping of U.S. financial regulators on Wednesday. The meltdown of leveraged hedge fund Archegos Capital Management this week, which inflicted losses on Credit Suisse, Nomura and other intermediaries, gives the Financial Stability Oversight Council fresh evidence to review. The council, led by Treasury and including heads of the Fed, the Securities and Exchange Commission and other major financial regulators, is scheduled to meet at 3 p.m. EDT (1900 GMT) to privately discuss hedge fund activity and the performance of open-end mutual funds during the coronavirus pandemic. It also will hold a rare public session to discuss financial system risks from climate change for the first time. Archegos’ failure to meet margin calls is the third significant market episode in the space of a year involving faltering hedge funds or open-end mutual funds.
Brief: Carlyle Group Inc. plans to bring most staff back to its offices on a regular basis by September, although many will continue working remotely part of every week for the foreseeable future. “By the fall, we’ll be able to sort of open all of our offices in a more fulsome way,” Reggie Van Lee, Carlyle’s chief transformation officer, said Wednesday during a Bloomberg Live event. “We are hoping for the fall and being agile in the meantime.” The private-equity firm is trying “not to be overly prescriptive” when it comes to remote work, Van Lee said. He expects some staff to come in daily, while others do so periodically -- perhaps as infrequently as once a quarter -- to ensure that Washington-based Carlyle is able to keep up with “community building.” Wall Street is diverging in its staffing expectations, with some executives at the largest banks anxious to get employees back to the office to foster more collaboration and win business. Other firms, like Apollo Global Management Inc. and Two Sigma Investments, have been testing plans for their staffs to work remotely a few days a week as pandemic restrictions ease.
Brief: Fund managers must manage a seamless integration between office and home working in order to avoid damaging silos. They should also adopt agile methodologies used in the technology market in order to speed up their operations and cope with a likely acceleration in the use of digital technology. These were some of the priorities and predictions for 2021 made by some of the industry’s leading technology and operations figures in the recently published FundsTech quarterly report. Andrew Hampshire, chief operating officer and chief technology officer at specialist fund manager Gresham House, said: “If businesses don’t have a slick mechanism for bringing office and remote workers together, businesses could see silos start to develop between those in the office and those working at home. Getting both the cultural aspects and technological aspects right therefore is very important.”
Brief: Legal & General Investment Management (LGIM), one of the world’s largest asset managers, has released its tenth annual ‘Active Ownership’ report, which reveals that over the course of 2020, it increased company engagements by 21 per cent and continued to vote globally, opposing the election of more than 4,700 company directors, as it sought to effect positive change at companies in which it invests. 2020 was an exceptional year for engagement. In March 2020 LGIM wrote to companies with constructive suggestions about how they could cope with the unfolding pandemic and resulting lockdowns, from supporting employees to raising capital. In addition to increasing focus on topics such as executive pay, board governance and income inequality, stewardship efforts have continued to shine a light on companies’ gender and ethnic diversity as well as the longer-term threat of climate change.
Brief: UK equity analysts forecast that the dividend yields on FTSE 100 shares will rise by 24 per cent from 2.56 per cent to 3.17 per cent this year as the economy begins its recovery from the coronavirus recession, according to new research from Bowmore Asset Management. Bowmore Asset Management’s research is based on a consensus of analysts’ views on how dividends will increase over the next year. Bowmore Asset Management says many FTSE 100 companies took conservative approaches to dividends in 2020 to ensure their balance sheets weren’t put under too much pressure during the early stages of the coronavirus crisis. Banks and oil & gas companies, two of the UK’s largest dividend paying sectors historically, were among the sectors to cut dividends the most aggressively in 2020, alongside the industries hardest hit by the lockdown restrictions, such as travel & leisure and commercial property. Banks were forced to suspend dividends at the height of Covid-19 crisis last March, with regulators believing they could have difficulty lending if dividends were continued to be paid. HSBC and BT were among the largest FTSE 100 dividend payers to cut dividends in 2020, with each cancelling payments totalling more than GBP3 billion.
Brief : Private equity firms are barreling through the records as they place bets on technological revolutions in sectors ranging from finance to health care. Firms have spent $80 billion acquiring companies in the global technology sector this year, according to data compiled by Bloomberg. That’s an all-time high for a quarter and already up 141% on this point in 2020, which went on to be a record year for such deals. This month alone has seen Thoma Bravo ink a $3.7 billion acquisition of fintech outfit Calypso Technology Inc. and Ontario Teachers’ Pension Plan agree to take a majority stake in Mitratech, a provider of legal and compliance software, in a $1.5 billion deal. In Europe, TA Associates said it would take over Dutch enterprise software firm Unit4 NV in a $2 billion-plus transaction, while one of Insight Partners’s portfolio companies bought data management group Dotmatics Ltd. for as much as 500 million pounds ($690 million). Earlier this year, Montagu Private Equity agreed to acquire U.K. software developer ITRS Group Ltd. for about $700 million. Buyout firms are flush with investor cash and are being drawn to startups helping companies to reinforce their businesses following the impact of the Covid-19 pandemic, according to Chris Sahota, chief executive officer at tech-focused advisory boutique Ciesco.
Brief: Hedge funds have recorded their strongest two-month run of investor inflows since 2014, with multi-strategy managers attracting the strongest interest so far this year, according to new research by eVestment. Allocators poured some USD16.44 billion into hedge fund strategies throughout February, which helped push total net inflows so far this year to USD23.74 billion. At the same time, strong positive performance for managers since the start of this year has brought hedge fund industry’s overall AUM to USD3.407 trillion. Multi-strategy hedge funds have been the biggest draw for investors, attracting USD8.98 billion in the first two months of 2021, which included USD5.34 billion in February. Meanwhile, event driven managers pulled in USD2.47 billion of allocator capital in February, swelling this year’s new money to USD3.30 billion.
Brief: A new survey by Sacker & Partners (Sackers), a UK-based specialist law firm for pensions and pensions litigation, has revealed that data breaches are occurring frequently. The survey showed that just over a third of those responding to the survey have suffered a breach in the last twelve months, with almost half of such breaches reported to the Information Commissioners Office. Sackers Senior Counsel, Arshad Khan, says: “The pensions industry is firmly in the sights of the media and seemingly public interest too when it comes to data security. And the headlines can be emotive, giving many the impression that the industry is not on top of the situation. But the pensions industry is no different to any other industry, and breaches or cyber attacks do and will continue to happen to everyone, including schemes, such as those in our survey, and government bodies such as DWP, TPR and HMRC too.
Brief: A year of pandemic-driven shortages of vital safety goods and medicines - not to mention consumer items like bikes and electronics - has not made Americans more willing to pay extra for U.S.-made goods. Yet a large majority think the government should do so. A new Reuters-Ipsos poll found 63% of Americans want U.S. agencies to buy American-made products in general, even if they cost significantly more, and 62% think the government should strictly buy U.S.-made vaccines. That enthusiasm dims a bit when it comes to other types of safety equipment, such as face masks: a majority, 53%, agree it is fine to buy personal protective equipment - or PPE - from foreign sources, while 41% disagreed. The poll shows a longstanding contradiction: Americans like the idea of buying American goods - but not if it means paying more personally for it. It also underscores a challenge facing the Biden administration, which has vowed to bolster manufacturers of crucial safety goods and pharmaceuticals as part of its larger push to revive the U.S. factory sector.
Brief: Banks roiled by the Archegos Capital fallout may see total losses in the range of $5 billion to $10 billion, according to JPMorgan. Losses from trades unwinding related to Archegos will be “very material” in relation to lending exposure for a business that is mark-to-market and holds liquid collateral, analysts led by Kian Abouhossein wrote in a note. They added that Nomura Holdings Inc.’s indication of potentially losing $2 billion and press speculation of a $3 billion to $4 billion loss at Credit Suisse AG is “not an unlikely outcome.” Analysts and investors are trying to figure out the final losses to banks exposed to the Archegos implosion, with the task made harder by the opaque nature of the leveraged trading involved. JPMorgan had previously estimated losses in the range of $2 billion to $5 billion. “We are still puzzled why Credit Suisse and Nomura have been unable to unwind all their positions at this point,” the analysts wrote, adding that they expect to see full disclosures from lenders by the end of this week.
Brief: EQT AB is nearing an agreement to acquire Cerba HealthCare in a deal valuing the French laboratories firm at about 4.5 billion euros ($5.3 billion) including debt, people with knowledge of the matter said. The European private equity firm could announce a deal as soon as this week to purchase Cerba from Swiss buyout firm Partners Group, according to the people. EQT beat out rival bidders including other investment funds, the people said, asking not to be identified because the information is private. Partners Group, which owns the business together with Canada’s Public Sector Pension Investment Board, has been exploring options for the business including a sale, Bloomberg News has reported. Representatives for EQT and Partners Group declined to comment, while a spokesperson for PSP didn’t immediately respond to a request for comment. Demand for hospital and laboratory assets has increased amid the Covid-19 crisis and a sale of Cerba could rank among the largest deals in the sector in Europe this year, according to data compiled by Bloomberg.
Brief : The U.S. Securities and Exchange Commission has been monitoring the forced liquidation of more than $20 billion in holdings linked to Bill Hwang’s investment firm that has roiled stocks from Baidu Inc. to ViacomCBS Inc. “We have been monitoring the situation and communicating with market participants since last week,” an SEC spokesperson said in emailed statement. Hwang’s New York-based Archegos Capital Management is at the center of a margin call that led to the forced liquidation on Friday, according to people familiar with the transactions. Among the companies sold were GSX Techedu Inc. and Discovery Inc. Banks including Credit Suisse Group AG and Nomura Holdings Inc. are warning investors that they may face “significant” losses after an unnamed U.S. hedge fund client defaulted on margin calls. Goldman Sachs is telling shareholders and clients that any losses it faces from Archegos are likely to be immaterial, a person familiar with the matter said.
Brief: Investors with a record hoard of money to finance distressed commercial real estate are finding themselves in a tough spot: There’s nowhere to spend it. The massive wave of defaults expected after the coronavirus shuttered offices, hotels and stores last year has so far failed to materialize. Now, as the U.S. economy swings from pandemic lows to a vaccine- and stimulus-induced rebound, the window of opportunity for discounted deals is closing before it ever really opened. That may sound like positive news to most Americans, but to a select group of investors who anticipated raking in big profits from the misfortunes of others, it’s a problem. Troubled properties aren’t coming to market because owners have little pressure to sell. Commercial real estate prices have held up -- or even risen -- because so much money is chasing so few deals. “We’re starting to see frustration rolling over into desperation,” said Will Sledge, senior managing director in the capital markets unit of brokerage Jones Lang LaSalle Inc. Investors are “willing to push prices up and their yields down in order to simply deploy capital.”
Brief: PwC Luxembourg has announced the release of the 21st edition of their annual Global Fund Distribution (GFD) poster showcasing the growth of cross border funds and distribution in 2020. The research covers all border markets globally and provides a unique and global view of the health of the industry. The top five asset management companies for cross-border distribution funds, based on the number of countries in which they distribute worldwide, are Franklin Templeton, Fidelity Investments, HSBC, Schroders, and BlackRock, with three of them based in the US, and two based in the UK. A total of 14,128 cross-border investment funds accounted for 128,520 registrations globally as of end-2020, a 0.7 per cent increase in the number of funds and a 5.8 per cent increase in the number of registrations compared to 2019. The number of cross-border ETFs decreased by 6.2 per cent to 4,482 in 2020. A record 297 ETFs closed during the year. This was primarily driven by increased competition, mergers and acquisitions and the failure to attract assets.
Brief: More than half of US institutional investors report that the events of 2020, including the protests over George Floyd’s death at police hands, have influenced their thinking on diversity and inclusion in their investments. A survey of 100 institutional investors by Aon found that 58 per cent have become more attuned to issues of gender and ethnic diversity in their investment approach and thinking. Investors may also be responding to a shifting climate in the industry, with stakeholders and shareholder activist groups upping their focus on diversity. Aon’s survey found that 11 per cent of investors say they have felt greater pressure from stakeholders to take concrete action by investing with diverse managers in the last year. Another 18 per cent reported that constituents, boards and beneficiaries are now asking for statistics on diversity within their portfolio, while 13 per cent of investors felt more pressure to engage with diverse investment firms.
Brief: Some of the world’s top money managers are betting on a post-pandemic spending boom that will boost real-world companies as economies reopen and people go back to their normal lives. Investors from Aberdeen Standard Investments Inc. and GAM Investments to UBS Asset Management are increasingly pouring money into companies where face-to-face interaction is the norm -- things like travel companies, restaurants, off-line shopping and “consumer experiences.” “A lot of people are estimating this is really going to lead to a new ‘roaring 20s’ theme,” said Swetha Ramachandran, the manager of GAM’s Luxury Brands Equity fund, referring to growing views that post-pandemic spending will hark back to the excesses of the 1920s. That’s when euphoric consumers piled into a wave of spending after the first World War and the 1918 flu pandemic. “There will be a lot of peacocking” as people start socializing, she said. Investors began piling into cyclical stocks that benefit from an economic rebound late last year following good news on the vaccine front, while pulling back from high-valued technology stocks. The rotation accelerated as Treasury yields rose in mid-February.
Brief: Investment scam reports surged by almost a third (32%) during 2020, with losses to these scams increasing 42% to £135.1m, according to a report by trade body UK Finance. So called ‘authorised' fraud losses increased 5% in 2020 to £479m as scammers ramped up online activity during the pandemic, its latest Fraud the Facts report stated. Unauthorised fraud losses dropped 5% as lockdown restrictions forced criminals to switch tactics, but were still very high at £784m, the latest Fraud the Facts report also revealed. Impersonation scam cases almost doubled to nearly 40,000 cases during the year. The shocking figures show why tackling scam activity, particularly online, needs to be prioritised across Government, UK Finance argued in the report. UK Finance is specifically calling for fraud to be included in the scope of the government's Online Safety Bill to better protect consumers from these scams. This would ensure that online platforms such as social media firms, search engines and dating websites take action to address vulnerabilities in their systems that are being exploited by criminals to commit fraud.
Brief : Private equity firms are ramping up their investments in the U.K.’s student accommodation market, pumping hundreds of millions of pounds into a resilient sector with an eye on high rental returns in post-Brexit, post-Covid Britain. More than one-third of deals for student property in 2021 so far have been financed by private equity, compared to about 15% in total between 2016 and 2019, according to data compiled by real estate advisers Jones Lang Lasalle Inc. With student application numbers projected to rise by 8.5% this year and purpose-built accommodation oversubscribed, property remains attractive for private equity firms. They are sitting on more than $300 billion for property investments alone and want to broaden their assets beyond offices, retail and hotels -- all badly hit by Covid-19. Major deals this year include Los Angeles-based Ares Management Corp.’s first U.K. student property investment. The $197 billion alternative asset manager spent 158 million pounds ($217 million) for two newly built housing units in February, and hopes to build a U.K. portfolio worth 400-500 million pounds, co-head of European real estate Wilson Lamont said in an interview. Ares isn’t alone. A recently launched Sunway Bhd and MBU Capital Group Ltd. fund already stands at 110 million pounds and is targeting almost double that.
Brief: The number of new hedge funds being launched has reached its highest level in three years, as managers look to capitalise on the nascent economic recovery, idiosyncratic and volatility-based opportunities, and a shifting macro environment. New hedge fund launches increased to around 175 in the fourth quarter of 2020, with the number of new funds unveiled exceeding the estimated quarterly liquidations for the second successive quarter, new industry analysis by Hedge Fund Research shows. The number of Q4 launches was up on the previous quarter’s total of 151, bringing the estimated number of new hedge funds launched in 2020 to 539, a period which included a record low in Q1 at the start of the coronavirus pandemic, HFR said this week. “New hedge fund launches continued to rise as industry expansion accelerated into 2021, driven by the strongest performance gains since 2000, as both managers and investors positioned for strong growth throughout 2021,” said Kenneth Heinz, HFR president.
Brief: The average bonus paid to employees in New York City’s securities industry in 2020 rose by 10% to $184,000, a top New York state financial regulator said in a statement on Friday. “Wall Street’s near-record year shattered all expectations,” New York State Comptroller Thomas DiNapoli said. “The early forecast of a disastrous year for financial markets was sharply reversed by a boom in underwriting activity, historically low interest rates, and surges in trading spurred by volatile markets,” he added. The 2020 bonus pool increased by 6.8% to $31.7 billion, during the traditional December-March bonus season, from $29.7 billion in 2019, according to the report, which called the growth figure “unique after a recessionary event”. Bonuses fell by 33% in 2001 after 9/11 attack and by 47% percent in 2008, the report said. Compensation firm Johnson Associates Inc in November said it expected year-end bonuses for most Wall Street workers to decline in 2020 compared with 2019 due to the impact of the COVID-19 impact on the U.S. economy.
Brief: In 2020, as the world convulsed under COVID-19 and the global economy faced its worst recession since World War II, billionaires saw their riches reach new heights. Now some are talking to their wealth managers about how to keep a hold of and consolidate their fortunes amid the global debris of the pandemic. Others are discussing how to preempt and navigate demands from governments, and the wider public, to pick up their share of the recovery costs. “The stock market crashed a year ago, by July or so my portfolio was back where it was before, at the beginning of the year, and now it’s far higher,” said Morris Pearl, a former managing director at BlackRock who chairs Patriotic Millionaires, a group that believes the high net worth should do more to close the wealth gap. “The fundamental problem is this gross inequality that’s getting worse.” The plans being discussed by the ultra-rich range from philanthropy, to shifting money and businesses into trust funds, and relocating to other countries or states with favourable tax regimes, according to Reuters interviews with seven millionaires and billionaires and more than 20 advisers to the wealthy.
Brief: Private equity’s control of health-care companies requires greater scrutiny to better assess the impact on the industry, several U.S. lawmakers said Thursday. Independent industry experts fielded questions from lawmakers at a House Ways & Means subcommittee hearing about private equity’s growing influence and recommended requiring health-care companies to disclose more financial and ownership data. “Private equity’s influence stretches like an octopus,” said Representative Bill Pascrell, a Democrat of New Jersey, who led the hearing. The industry has made a push to expand into every corner of the health system, from nursing homes to home health to doctors practices. Private equity deals in the sector increased 21% from the year earlier, according to Bain & Co. Sabrina Howell, an assistant professor of finance at the NYU Stern School of Business, said all companies that accept government money should disclose who their owners are. Howell co-authored a study that found private equity ownership of nursing homes increased the short-term probability of death by 10%. “The private equity industry is having an overwhelmingly positive impact on health care across America” by lowering costs, improving access, funding cures and delivering more effective treatments, Drew Maloney, president of the American Investment Council, said in a statement Thursday.
Brief: In the early days of the pandemic, Ken Griffin talked with President Donald Trump and Vice President Mike Pence about stimulus and fast-tracking Covid therapies. Now, he sees an opening to work with the Biden administration to address a year of lost learning. “The political party doesn’t matter to me,” said Griffin, 52, who contributed $66 million to Republicans in the last election. “What matters is the receptivity to solving the problem.” The past 15 months have been busy for the billionaire founder of hedge fund Citadel and market-maker Citadel Securities, as both parts of his business successfully navigated the pandemic-fueled volatility. Griffin was acutely aware of the “existential and economic threat” posed by the pandemic early on after hearing from employees in China, Citadel Securities’ chief executive officer, Peng Zhao, and an employee who had family in Wuhan. To combat the work from home challenge, Citadel Securities created a trading outpost in a high-end Palm Beach resort. The firm later profited from the huge influx of retail traders using apps such as Robinhood.