Large institutional investors are set to put cash to work in 2017, a BlackRock survey found.
One
in four (25%) institutions surveyed intend to decrease their cash
allocations during the year, twice as many as those who plan to increase
their cash holdings (13%). The survey shows a clear trend that this
cash will be deployed in 2017, with institutional investors anticipating
making significant shifts to less liquid assets. Investors are also
looking to allocate to higher yielding areas, and are increasingly
considering non-traditional asset classes.
“The recent equities
rally has been more than off-set by years of low rates, and many
institutions are still suffering from underfunding.” says Edwin Conway,
global head of the Institutional Client Business at BlackRock. “In the
past year, investors have been challenged by global equities
underperformance and negative fixed income returns. On top of this added
pressure to deliver returns, reflation is set to take root this year
and could well be the final prompt that institutions have needed to
rethink their cash allocations and views on risk. The tide of
institutional investor interest in less liquid assets is turning into a
wave, with a significant uptick in allocations anticipated as they seek
alternative ways to generate returns and income.”
Real assets are
anticipated to be the largest beneficiaries of institutional asset flows
in 2017, with 61% of those surveyed expecting to increase their
allocations here. Only 3% of investors plan to decrease allocations. On a
net basis, taking into account increases minus decreases, 58% of
institutional investors globally will be increasing allocations to real
assets. This compares to 49% (net) who expected to increase their
allocations in 2016. More than half of institutional investors in the
U.S. and Canada (53% net) expect to increase exposure to real assets.
Real
estate is also set to see significant interest, with 47% of investors
globally looking to increase allocations to the asset class, and only 9%
looking to decrease allocations (38% net). In the U.S. & Canada 29%
(net) plan to increase real estate holdings.
The outlook for
private equity flows is also looking positive, with almost half of
global investors (48%) planning to increase their holdings, and only 13%
looking to reduce allocations (35% net). Nearly one-third of investors
in the U.S. and Canada will look to increase their private equity
holdings (32% net).
Conway adds: “Institutional investors are
recognizing that they need to do something different to get the
investment outcomes they want. With market volatility and lower returns
expected from traditional asset classes for the near future, investors
are having to look elsewhere for yield. They are increasingly seeking
alternative income, and are embracing less liquid strategies to enhance
returns. Many alternative asset classes, such as long lease property,
infrastructure and renewables, are able to provide inflation protection,
along with secure income streams, to take care of investors’ need for
cash flows.”
NEXT: Credit exposure, hedge funds and active and passive equity allocations
Within fixed income, there is a clear global trend showing a move
away from core assets and towards strategies with the potential to yield
higher returns, according to the survey. Private credit is the clear
frontrunner for fixed income, across all regions and investor types, as
the area where institutions expect to increase holdings (61%), with only
4% looking to decrease slightly (58% net).
Credit strategies
more broadly are set to benefit from a rebalancing of assets away from
core and core plus (-10% net). U.S. bank loans are expected to see an
increase in allocations from investors (26% net), followed by high yield
(23% net), securitized assets (22% net) and emerging market debt (19%
net).
Looking at fixed income allocations as a whole,
institutional investors in the U.S. and Canada expect their allocations
to remain broadly flat.
Globally, corporate pensions are
decreasing their allocations to hedge funds (-22% net), especially in
the UK and the U.S., and moving towards long duration bonds, likely
pointing to de-risking trends. Insurers are also following suit, with a
decrease of 12% in allocations to hedge funds globally, and increased
favorability towards real assets and real estate.
Globally, one
in four investors (28%) intend to increase their allocations to active
equities relative to passive equities, with more than half (55%)
planning to keep their current mix of active and passive strategies
constant. Seventeen percent intend to increase their allocation to
passive strategies.
In terms of equity allocations overall, the
shifts differ substantially by region and client type. The U.S. and
Canada is the only region in which institutional investors overall
expect to reduce their equity holdings (-34% net), largely driven by
corporate pension plans.
In November and December 2016, BlackRock conducted a global survey of
240 of its largest institutional clients, including public pensions
(23%), corporate pensions (33%), official institutions (4%), insurers
(25%), investment managers (7%), endowments and foundations (4%), and
others (4%). In terms of geographic distribution, 39% of the respondents
were located in North America, 38% in Europe, the Middle East and
Africa, 13% in Asia-Pacific, and 10% in Latin America.
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Nationwide Combines Public and Private Retirement Plan Teams; Lincoln Financial Names
New President of Tax-Exempt Retirement Plans; Consequent Capital Management Acquires
Gray & Company Assets; and more.
Nationwide
Combines Public and Private Retirement Plan
Teams
The public- and private-sector sales teams of Nationwide’s retirement
services will now operate as a single entity headed by Eric Stevenson,
who has led Nationwide’s public-sector sales team since 2010. The newly
combined retirement plans distribution organization will report to John Carter,
president of Nationwide’s retirement plans business.
“As one distribution team, our retirement plans
business now has one of the largest, most tenured sales forces in the industry
including NAPA-recognized top wholesalers,” says Stevenson. “The investments
Nationwide has made in meeting the needs of advisers, plan sponsors and participants
have been recognized by third-party industry experts, including DALBAR for our website
and service, and PLANSPONSOR Magazine for best-in-class client satisfaction.”
Under Stevenson, Nationwide’s retirement plans
business won or retained some of the largest retirement plans in the country. It
serves more than 2.1 million retirement plan participants in nearly 39,000
plans.
“We’re investing more than ever in tools and
technology to meet the needs of larger plans, and we will continue to provide
access to customized retirement plans to America’s small and medium-sized
businesses and public-sector plans,” says Carter.
Joe
Frustaglio, leader of private-sector sales, recently decided to
leave Nationwide after 32 years of service.
“Joe has been a valued member of the Retirement Plans
leadership team and a dedicated leader to our private sector sales organization
for the past 11 years,” says Carter. “His many contributions to our business
and the industry will be long lasting.”
Nationwide will begin an immediate search for a new
leader, reporting to Stevenson, who will assume responsibility for the adviser-sold
401(k) business.
NEXT: Lincoln
Financial Names New President of Tax-Exempt Retirement Plans
Lincoln
Financial Names New President of Tax-Exempt Retirement Plans
Lincoln
Financial Group announced that Vincent Garzarella
has joined the Retirement Plan Services (RPS) business as vice president of
Tax-Exempt Markets.
“Vince’s industry experience will be invaluable as we
focus on delivering our high-touch model to more plan sponsors in the
government and health care markets,” says Ralph
Ferraro, senior vice president and head of product for RPS. “He will also
be responsible for diversifying our product portfolio, ensuring we have the
right solutions in place to meet the needs of plan sponsors and continue to
drive positive outcomes for participants.”
Prior to joining Lincoln Financial, Garzarella spent
18 years at Vanguard where he served in a variety of roles including department
head of 403(b)(7) and 401(k) client administration. Garzarella graduated from
Villanova University with a bachelor’s degree in sociology and a master’s
degree in business administration from Saint Joseph’s University.
NEXT: Consequent
Capital Management Acquires Gray & Company Assets
Consequent Capital Management Acquires Gray & Company Assets
Consequent
Capital Management has acquired the assets of Atlanta-based Gray & Company, which had
approximately $4 billion under advisement, the firm says. Consequent’s
investors and clients include public and private pension funds, foundation and
university endowments, and large family offices.
“Our core belief is that there is an abundance of
untapped value in overlooked fund managers and niche alternative strategies,
and our team is well-suited to source, vet and manage those opportunities,”
says Consequent CEO Earl Robinson. “We are very proud that our investment specialists have worked
at some of the largest and most well-respected investment management and
investment advisory firms in the world, and we have acquired the assets of a
legacy firm with a long track record.”
The firm says it is a thought leader in minority-owned and emerging investment
managers, as well as impact strategies benefitting targeted communities. The
report Diversity Matters released in February 2015 by McKinsey & Company
indicates “that companies in the top quartile for gender or racial and ethnic
diversity are more likely to have financial returns above their national
industry medians.”
Robinson's career
includes senior positions at Morgan Stanley, JPMorgan Investment Management and
the New Orleans Startup Fund. The senior team also includes Cyril Theccanat as chief investment officer, Kenneth
Simon as chief compliance officer,
and Chandra Kerley Ridley as chief operating officer.
Founded in 2016, Consequent’s investment management
solutions include multi-strategy alternatives funds-of-funds, impact venture
capital, impact real estate, and special situations.
NEXT: PNC Institutional Asset Management Names Managing
Director
PNC Institutional Asset Management Names Managing
Director
PNC Institutional Asset Management has appointed Holly
Harrison as managing director,
leading PNC’s Mandate business. Harrison will be responsible for expanding the
set of Mandate investment solutions offered by PNC Capital Advisors.
She will also retain her current
position as head of Consultant Relations, RFP and Business Strategy for PNC
Capital Advisors. Since joining PNC in 2009, she has held several leadership
roles in the asset management organization and has more than 22 years of
experience in product management and business strategy.
“Holly’s deep industry knowledge
and experience in working with institutional investors and consultants serve us
well as we expand our offerings and strengthen the solutions-oriented approach
of our mandate business,” says Alistair
Jessiman, managing executiveof PNC Wealth & PNC Institutional Asset
Management.
PNC Bank, National Association is a member of The PNC Financial
Services Group.
NEXT: Lockton Promotes Dallas Consultant
Lockton Promotes Dallas Consultant
Global consultant Lockton
has promoted 11-year company veteran Courtney
Stroope in Dallas.
She specializes in consulting clients on retirement
plan management issues. For the last six years, she has lead the Dallas-based
service team as vice president and unit manager. Stroope has also worked as a
benefits supervisor for a local energy firm.
“Courtney’s promotion is exciting for a lot of
reasons,” says Bruce Sammis, CEO of
Lockton Dunning Benefits, the firm’s Texas-based benefits consulting
business. “She’s not only representative of the culture we foster here at
Lockton, one that rewards great success with greater opportunity, but she’s
also indicative of the type of adviser we look for. Courtney’s years of
hands-on experience mean that she has seen and managed every aspect of this
industry. She has the voice of experience and that inspires tremendous
confidence in the people who work with her.
Pam Popp, president of Lockton’s National Retirement
Practice adds, “Managing wealth benefits has become an even bigger issue for
our customer base. Whether it’s lowering the risk of fee litigation,
understanding the impact of pension liability, or developing a strategy for
executive benefits, clients need help with complex financial and strategic
issues. We need Courtney’s expertise to guide them to solutions that make sense
for their businesses and the people they employ.”
NEXT: IRIC
Names First National Director
IRIC
Names First National Director
The Institutional
Retirement Income Council (IRIC), a non-profit think tank for the
retirement income planning community, has selected Robert Melia as its executive director.
“We are thrilled that Bob has agreed to serve in this
critically important position,” says William
Charyk, IRIC’s Board Chairman. “Bob has been a valuable IRIC member and
brings to our organization a wealth of knowledge and expertise in the defined
contribution and financial services industry. We are confident that Bob’s
leadership and experience will be beneficial to not only IRIC members but to
retirement plan sponsors who are looking for creative solutions to provide
employees with retirement income security.”
Previously, Melia spent 23 years at Lincoln Financial
Group where he served several roles including president of product development for
Retirement Plan Services. In that role, Melia worked with retirement plan
providers and other financial services industry stakeholders on the development
and implementation of retirement income solutions for defined contribution plan
sponsors.
He is also a member of the SPARK Institute Board of
Directors. He holds a bachelor’s degree from Assumption College and a master’s
degree from Drexel University.
“I am honored to take on this leadership role at
IRIC,” says Melia. “Providing institutional retirement income security solutions
for today’s workers and tomorrow’s retirees is a very high priority for plan
sponsors with participants receiving additional security through their
workplace retirement plan. I look forward to working with the entire IRIC
organization, and supporting their efforts toward achieving this goal.”
CUNA Mutual Retirement Solutions recently hired Stacey Scott
as TPA relationship manager. She
will be responsible for growing TPA relationships in the Eastern Division and
report to Chris Phillips, director of institutional sales.
Scott has more than 18 years of experience
in the financial services industry. She’s served as TPA regional vice president
with Voya Financial and has also held roles as RVP of client relations, client
relationship manager and marketing consultant/internal wholesaler.
“Presence in the TPA channel is a critical component for the long-term strategy
for our Retirement Services business, and this position will play a key role in
executing that strategy,” says Phillips. “We are very excited to be able to
expand our footprint in the TPA marketplace with a great addition like Stacey.”
Scott says “This is a great opportunity to draw on the experience I have in
this industry and help build something from the ground up. You only get a few
chances in your career to be a part of something this instrumental.”
NEXT: Wilshire
Associates Names New Managing Directors
Wilshire
Associates Names New Managing Directors
Wilshire
Associates, global investment consulting and services firm, announced
the appointments of Kristofer Kelleher
and Robert Noe to managing director
positions. Kelleher will serve as managing director with Wilshire Consulting. Noe
will serve as managing director with Wilshire Funds Management.
“Both Kris and Rob have made outstanding contributions
to the firm and we are pleased to recognize their hard work, expertise, and
ongoing commitment to meeting the needs of Wilshire’s clients,” says John C. Hindman, president of Wilshire
Associates. “In their new roles, Kris and Rob will be well-positioned to
support Wilshire’s continued efforts to grow and provide high-quality investment
advisory and management solutions to a wide variety of global clients across
the retail and institutional spaces.”
Kelleher is responsible for marketing strategy and
business development for Wilshire Consulting, supporting the firm’s existing
and prospective client base of large institutional asset owners. Tasked with
oversight of the sales and marketing teams, he will lead efforts to
significantly expand the Wilshire OCIO Solutions practice. Kelleher joined
Wilshire in 2012 and has 20 years of business development experience in the
financial services industry.
Noe oversees Wilshire’s research group and leads the
overall team responsible for the due diligence, rating, and recommendation of
investment managers supporting both Wilshire Funds Management and Wilshire
Consulting. He joined Wilshire in 2011 and brings more than 19 years of industry
experience to the firm.
NEXT: Lovell
Minnick Partners Acquires Majority Stake in Foreside Financial Group
Lovell
Minnick Partners Acquires Majority Stake in Foreside Financial Group
Lovell
Minnick Partners, a private equity firm specializing in financial
services companies, announced the signing of a definitive agreement to acquire
a majority stake in Foreside Financial
Group. The firm provides a variety of regulatory compliance and
distribution solutions to clients in the investment management industry. Financial
terms of the private transaction were not disclosed.
Established in 2005, Foreside is led by CEO Richard Berthy and President
Dave Whitaker, who will remain shareholders and continue in their current
management roles.
Foreside delivers outsourced services to investment advisers
and broker dealers and the financial products they manage or distribute.
Servicing more than $800 billion of fund products, Foreside offers outsourced
solutions for legal underwriting, FINRA licensing, compliance consulting, fund
officer services and trust governance.
“Our relationship with Lovell Minnick goes back many years,
and we share a strategic vision to achieve greater scale in our core
distribution and compliance services for investment managers and their funds,
both in the U.S. and offshore markets,” says Berthy. “Lovell Minnick has
an excellent track record of partnering with financial services firms in the
investment management industry, and their capital and strategic insight will
help us grow our client base and offerings while ensuring that we continue to
deliver first class service.”
Lovell Minnick holds ownership stakes in several of
Foreside’s existing clients including 361 Capital, Chartwell Investment
Partners, and Matthews International Capital Management.
“As one of the most respected outsourced service providers in
the asset management industry, Foreside is uniquely positioned to help clients
navigate the changing financial and regulatory landscape,” says Spencer Hoffman, partner at Lovell Minnick. “We look forward to working
closely with Rich, Dave and the rest of Foreside’s strong management team as
they execute their strategy to grow the business and to further broaden the
scope of services they provide.”
The transaction is expected to close in the second quarter of
2017, subject to customary regulatory reviews and approvals. Morgan, Lewis
& Bockius, LLP served as legal counsel to Lovell Minnick Partners.
NEXT: Cafaro
Greenleaf Hires Director of Client Service
Cafaro
Greenleaf Hires Director of Client Service
Eileen
Mahoney recently joined Cafaro
Greenleaf as the director of client service and administration. She has
more than 20 years of experience in operations and client administration in
both the advisory and financial services industries. She is also versed in
nonprofit grants administration and event planning. Previously, she spent 14
years at Blackrock.
"We were very fortunate to find someone of Eileen's
talent to fill this role,” says Brian Clark, managing director of CG. “I am
confident that Eileen will provide the high level of customer service to our
clients and their participants that they have come to expect from Cafaro
Greenleaf."
Cafaro Greenleaf is a boutique firm comprised of professional
retirement plan advisers and consultants to corporate, public, and
institutional clients.
NEXT: Vanguard Names Sales Leader of
Institutional Investor Group
Vanguard Names Sales Leader of Institutional Investor Group
Gerry Burke
has been named head of Institutional Sales for the $900 billion Vanguard Institutional Investor Group,
responsible for overseeing new business development for the firm’s defined
contribution, defined benefit, nonprofit, and institutional advisory
businesses.
Throughout the last 17
years at Vanguard, Burke has served in various leadership roles focusing on technology,
marketing, advice, participant education, client service and sales. He returns
to the Institutional Investor Group division after most recently serving as a
regional sales manager for Vanguard’s Financial Advisor Services.
Burke earned a
bachelor’s degree in mathematics from Worcester State University and a master’s
degree from the Wharton School of the University of Pennsylvania. Before
joining Vanguard, he worked for Coopers and Lybrand, as well as for PricewaterhouseCoopers.
He reports to Martha King, managing director of Vanguard
Institutional Investor Group.
NEXT: Standard Names Second
Vice President and Associate Actuary
Standard Names Second Vice President andAssociate Actuary
Standard
Insurance Company has promoted Julie Briggs to second vice
president and associate actuary.
Prior to joining The Standard in 2005, Briggs spent
nearly seven years at Towers Perrin and Mercer in benefits plan consulting. She
has held actuarial positions in The Standard’s Retirement Plans business in
both the defined benefits area and the product and risk management sector, as
well as on the Corporate Actuarial team. She currently oversees the enterprise
risk-management program.
In her new role, Briggs will expand her provision of
governance and oversight throughout financial reporting as well as product and
pricing decisions across all business lines. She will also maintain
relationships with key external stakeholders including auditors, regulators and
rating agencies to ensure they have information to understand actuarial practices
and outcomes at the company.
“Julie is a proven actuarial leader, having previously
driven the establishment of our enterprise risk-management practice as well as
leading a number of critical cross-divisional initiatives,” says Sally Manafi, vice president and corporate actuary at The Standard. “Her
leadership in her expanded role will be crucial as we continue to expand our
risk-management activities and support other business strategies.”
Briggs earned a bachelor’s degree in mathematics and
classical studies at Willamette University. She is a Fellow of the Society of
Actuaries and a member of American Academy of Actuaries.
The Standard is a provider of financial products and
services including group and individual disability insurance, group life and
accidental death and dismemberment insurance, group dental and vision
insurance, absence management services, retirement plans products and services
and individual annuities.