The ‘great rotation’ from bonds into equities: a few weeks ago it was looking like it might be seriously on. Even Albert Edwards sort of kind of said equities were cheap. And Ray Dalio said it is happening, too.
But there are a bunch of reasons why it doesn’t seem to be quite such a sure thing, at least for now. Read more
Bit of a Volcker Rule/whither market-making talker from the WSJ… BlackRock is back touting post-bank ‘internal’ trading for its clients.
Feels like it’s been building a trading platform since forever actually… Read more
The auction process to sell Deutsche Bank Asset Management is faltering after JPMorgan and State Street withdrew from the bidding, making it more likely the bank will have to break up the business as part of a prolonged sale of the assets. Deutsche Bank had raced ahead with the sale process in the past week, narrowing interest from a wide range of potential bidders to a shortlist of a half a dozen, before the leading contenders withdrew. Ameriprise, another candidate to buy the business, is baulking at the price and could soon withdraw, the FT says, citing people familiar with the situation. Read more
Goldman Sachs is to beef up its asset management business as part of a strategy to tap into the retirement savings of a wave of ageing baby boomers, says the FT. Goldman Sachs Asset Management, a unit of the Wall Street bank, has agreed to buy Dwight Asset Management for an undisclosed sum. Dwight, which is based in Vermont, specialises in so-called “stable value” money management, which aims to deliver safe and consistent returns to investors in a similar way to money market funds. Dwight has $42bn of assets under supervision, and is now on track to become part of GSAM in the second quarter of the year. Goldman is buying the firm from Old Mutual Asset Management, part of the London-based savings group, Old Mutual. Read more
In the words of Goldman Doc, Morgan Grumpy, JP Happy, Bank of Sleepy, Barclays Bashful, Sneezy Citi, and Dopey Deutsche:
We dig dig dig dig dig dig dig from early morn till night
We dig dig dig dig dig dig dig up everything in sight
We dig up diamonds by the score
A thousand rubies, sometimes more
But we don’t know what we dig ‘em for
We dig dig dig a-dig dig Read more
A scathing report prepared for the California Public Employees’ Retirement System has found that asset managers paid about $180m over the past decade to win business at the largest US public pension fund, the FT reports. As state and federal investigations into the use of so-called “placement agents” continue, the conclusions of the 17-month review recommended policy changes at the pension fund and point to further action at Calpers and other funds. Bloomberg adds that Calpers said it will take steps to prevent investment decisions from being corrupted by middlemen. Read more
FT Alphaville has been researching the issue of so-called ‘liquidity transfers’ ever since we first came across the matter in Life & Pension Risk in October.
As Risk noted at the time, there’s been an increasing trend for banks to swap their illiquid Asset-Backed Securities (ABS)-style assets for much more liquid securities held by pension and insurance funds via extremely long repo arrangements. Read more
It may not be the workings of an Anna Chapman-style Russian sleeper cell.
But it is a case involving suspected double-agents. In the asset management industry. Read more
Royal Bank of Canada has struck a £963m ($1.5bn) deal to buy BlueBay Asset Management, reports the FT. London-listed BlueBay’s shares jumped by 30% on news of RBC’s 485p per share offer, capping a turbulent year for the UK bond and fixed income asset manager and netting millions for its founders Hugh Willis and Mark Poole. At a a 29.1% premium to BlueBay’s Friday closing price the deal will hand Willis, chief executive, and Poole, chief investment officer, a windfall of £81m each from their 8.5% stakes only months after they each sold £21m of shares into the market. After number-crunching, Lex notes that the price is not a particularly high premium to pay for control of BlueBay and its ‘rarity value’. Read more