News > All

Transferring wealth to the next generation
Asset Management
<p>Succession planning and achieving a smooth transition of wealth from one generation to the next can be a messy process. Feuding siblings in the shadow of a controlling (usually) father make for fun soap opera but can quickly dissipate hard-earned riches and forge lasting enmities.</p> <p>HSBC Private Bank is one of several wealth managers who recognize that their role extends beyond portfolio management or simply finding the best investment returns.</p> <p>The UK-based bank recently hosted events entitled “Exploring the Future of Wealth as part of its Next Generation Programme” in London and Miami where opportunities and obstacles faced by the children of family business owners were discussed.</p> <p>Topics on the agenda included the latest entrepreneurial trends, leadership best-practices, sophisticated investment strategies, philanthropy and social awareness, explained Gerry Joyce, US head of private wealth solutions at HSBC Private Bank in an interview.</p> <p>“Equally important, they were a chance for young people to share their experiences with their peers,” he said.</p> <p>Managing inevitable conflicts, especially when business and family interest overlap, and creating and communicating a clear framework for succession that is then committed to by all parties is critical, he added.</p> <p>“The transference of control is the acid-test for a wealthy business family,” he stressed.</p> <p>But, the big challenge for HSBC and other banks will surely be Asia. Here, maneuvering and scheming for position as an octogenarian patriarch’s powers decline is as much a staple of tabloid coverage as are the daily dramas of the Kardashian clan in the US.<br /> Photo: Tom Brandt</p>
Women and VC: The aftermath of Ellen Pao vs KPCB
&nbsp; Last week we saw Ellen Pao finally throw in the towel and drop her appeal after losing her sexism case against former employers Kleiner Perkins Caulfield and Byers, a Silicon Valley-based venture capital. In article published in Re/code, the former Reddit CEO draws a line under her three-year-long battle, detailing exactly what she was up against, and why she
Delayed birth of Asia Region Funds Passport Scheme
Asset Management
<p>The Asia Region Funds Passport scheme has been gestating for about five years. Workshops among the thirteen APEC economies (excluding China) were followed by a statement of intent in 2013. Four days ago, finance ministers from seven of the region’s leading nations met at Cebu in the Philippines to announce that its birth was on schedule for early next year.</p> <p>Except, they didn’t. Singapore declined to add its signature because the statement of understanding failed to address the crucial issue of equal taxation, a Monetary Authority of Singapore spokesperson told AsianInvestor today.</p> <p>The passport scheme would allow asset managers from countries within the region access to each other’s retail investor markets through the distribution of their products. According to the APEC Policy Support Unit, it could save the investors $20 billion a year annually in fund management costs, offer higher investment returns at the same or lower degree of risk, and encourage the establishment of locally domiciled funds which could create 170,000 jobs in APEC economies within five years.</p> <p>But, clearly the scheme will be still-born if the tax issue is unresolved. South Korea and Australia, especially, have unequal tax regimes for domestic and overseas fund providers – and basically shut foreign interlopers out.</p> <p>Singapore, with its highly sophisticated fund management industry, would be a likely winner if taxation is neutralized across the region. It’s just as likely that the rest of APEC know this – and are fearful.<br /> Photo: Chris Guillebeau</p>
Inside the brain of an investing genius – Peter Lynch
Asset Management
<p>Those readers who have frequented my Investing Caffeine site are familiar with the numerous profiles on professional investors of both current and prior periods (See Profiles). Many of the individuals described have a tremendous track record of success, while others have a tremendous ability of making outrageous forecasts. I have covered both. Regardless, much can be learned from the successes and failures by mirroring the behavior of the greats – like modeling your golf swing after Tiger Woods (O.K., since Tiger is out of favor right now, let’s say Phil Mickelson). My investment swing borrows techniques and tips from many great investors, but Peter Lynch (ex-Fidelity fund manager), probably more than any icon, has had the most influence on my investing philosophy and career as any investor. His breadth of knowledge and versatility across styles has allowed him to compile a record that few, if any, could match – outside perhaps the great Warren Buffett.</p> <p>Consider that Lynch’s Magellan fund averaged +29% per year from 1977 – 1990 (almost doubling the return of the S&amp;P 500 index for that period). In 1977, the obscure Magellan Fund started with about $20 million, and by his retirement the fund grew to approximately $14 billion (700x’s larger). Cynics believed that Magellan was too big to adequately perform at $1, $2, $3, $5 and then $10 billion, but Lynch ultimately silenced the critics. Despite the fund’s gargantuan size, over the final five years of Lynch’s tenure, Magellan  outperformed 99.5% of all other funds, according to Barron’s. How did Magellan investors fare in the period under Lynch’s watch? A $10,000 investment initiated when he took the helm would have grown to roughly $280,000 (+2,700%) by the day he retired. Not too shabby.</p> <p>Background </p> <p>Lynch graduated from Boston College in 1965 and earned a Master of Business Administration from the Wharton School of the University of Pennsylvania in 1968.  Like the previously mentioned Warren Buffett, Peter Lynch shared his knowledge with the investing masses through his writings, including his two seminal books One Up on Wall Street and Beating the Street. Subsequently, Lynch authored Learn to Earn, a book targeted at younger, novice investors. Regardless, the ideas and lessons from his writings, including contributing author to Worth magazine, are still transferrable to investors across a broad spectrum of skill levels, even today.</p> <p>The Lessons of Lynch</p> <p>Although Lynch has left me with enough financially rich content to write a full-blown textbook, I will limit the meat of this article to lessons and quotations coming directly from the horse’s mouth. Here is a selective list of gems Lynch has shared with investors over the years:</p> <p>Buy within Your Comfort Zone: Lynch simply urges investors to “Buy what you know.” In similar fashion to Warren Buffett, who stuck to investing in stocks within his “circle of competence,” Lynch focused on investments he understood or on industries he felt he had an edge over others. Perhaps if investors would have heeded this advice, the leveraged, toxic derivative debacle occurring over previous years could have been avoided.</p> <p>Do Your Homework</p>
Daily Scan: China markets slump, oil prices swing
Capital Markets
<p>Updated throughout the day</p> <p>September 15</p> <p>Good evening everyone. China has now posted it biggest two-day fall in three weeks. The Shanghai Composite Index closed for the day down 3.5%, meaning it has now lost 7% of its value this year. The Guardian reported today that economists are now concerned that the Chinese economy is weakening faster than the official data suggests, showing growth of around 7% this year. Research from energy consultancy Wood Mackenzie suggests the Chinese economy grew at an annual rate of 5.3% in the second quarter of 2015, and just 4.5% in Q3. Here is how the markets ended elsewhere in Asia: </p> <p> Hang Seng: -0.49%<br /> Jakarta Comp: -1.01%<br /> KLSE Comp: +0.46%<br /> Nikkei 225: +0.34%<br /> Straits Times: -0.92%<br /> Seoul Comp: +0.32</p> <p>The Wall Street Journal reports that oil prices were also choppy in Asian trade today. The Brent crude swung between gains and losses on the back of volatile Chinese markets amid signs the US oil producers are suffering more from low prices.Here is what else you need to know:</p> <p>Alibaba takes a hit after Barron's article rebuttal. US investors sent shares of Alibaba Group stock tumbling Monday following a critical article from Barron’s - despite a detailed rebuttal,  The stock fell as much as 4.9% Monday, touching $61.48. Wall Street Journal.</p> <p>Credit Suisse nears deal to settle claims over dark pool Credit Suisse is expected to pay at least $80m to settle allegations that it misled clients about its dark pool, trading venues meant to allow asset managers  to trade large blocks of shares without moving the price against them. Financial Times.<br /> Malaysia wants state companies to repatriate foreign earnings. Malaysia wants its state-owned funds to repatriate some earnings from the more than 500 billion ringgit ($115 billion) worth of investments made abroad. This is seen as a way to help stem the decline of the nation's currency, which has weakened by 26.3% against the dollar over the past year. Nikkei<br /> North Korea Nuclear site "in operation". North Korea says its main nuclear facility, the Yongbyon complex, has resumed normal operations. The country was improving its nuclear weapons "in quality and quantity", a state-run news agency said. Yongbyon's reactor was shut down in 2007. BBC<br /> Beijing builds third airstrip on contested South China Seas islands. China appears to be building a third airstrip in contested territory in the South China Sea, a US expert said on Monday, citing satellite photographs taken last week. Experts say the strip is long enough  for most Chinese military aircraft, giving Beijing greater reach into Southeast Asia. </p>
Financiers prove again they can do anything you can do better
Lifestyle, 4:01
<p>Serena Williams failed America by losing the U.S. Open to an unranked Italian. But American Wall Streeters refused to be shamed by Europeans. Last weekend they hosted their own tennis tournament.</p> <p>The first annual Finance Cup pitted Team Wall Street against Team Europe in a different version of a Grand Slam event, reports Business Insider. London-based portfolio manager David Anving and New York-based investment banker Jeffrey Appel organized the event, which took place on Randall's Island.</p> <p>Financiers slammed balls, grunting like a Williams sister, running like Roger Federer, and sweating like the players at the U.S. Open nearby. Wall Street beat Europe after three rounds, winning 8-1. Pershing Square Capital's Bill Ackman secured an American victory in his epic battle against Cevian Capital's Christer Gardell.</p> <p>Competition was fierce. Credit Suisse's Mario Ancic was once ranked number 7 for men's singles globally, once beating Federer. Ludovic Walter, an associate at Cohen partners in London, was once the top player at Duke. Walter's doubles partner Alexander Hartman, formerly of Goldman Sachs, used to be number one at Ole Miss. Thomas Blake, of Jaffe Tilchin Investment Partners, was the top player at Harvard during his day.</p> <p>The finance world brought out a number of other American and global champs to compete for the honor and glory. Rumor has it a second tournament will be hosted in London next year. Start practicing now.<br /> Photo: PughPugh</p>
UK Pimco execs, CEO got 30% pay cut in 2014
Asset Management
<p>Pimco's U.K. directors had their pay slashed by 30% in 2014 in the wake of Bill Gross' departure last fall, reports the Financial Times.</p> <p>Pimco has been bleeding assets since before Gross left for Janus Capital last September. Its London unit had a 11% decrease in assets under management last year, falling to £120.8 billion, after the flagship Total Return bond fund failed to produce strong returns and the firm lost both its CEO and founder within a year.</p> <p>In 2014, Pimco's nine U.K. directors were paid £36.5 million, compared to £48.6 million total in 2013. The highest paid director saw his pay cut 57% from £22 million to £15.7 million. Pimco's U.K. directors include William Benz, managing director in London, and Douglas Hodge, CEO since Mohamed El-Erian's sudden resignation in early 2014.<br /> Photo: Images Money<br /> &nbsp;</p>
Earnings surprises…are you kidding me?
Asset Management
In the game called the quarterly earnings season, positive surprises have become so commonplace among US large-cap stocks that they’ve nearly lost all meaning. We wonder why investors keep playing along. The media are an integral part of the entertainment, cheering or booing companies from the sidelines as if earnings season were a sporting event. This incessant focus further feeds
Biden flirts with Wall Street
Lifestyle, 4:01
<p>Vice President Joe Biden still hasn't committed to running for president in 2016, but he's certainly flirting with the option.</p> <p>Last week, Biden told Stephen Colbert that he's still dealing with the death of his son, and he didn't know if he could handle a run for the presidency. But, Biden seems to have sent out some feelers while in New York to film for Colbert's show, reports Business Insider.</p> <p>Biden met with Robert Wolf, a former UBS executive, after seeing Colbert. Wolf was a strong fundraiser for President Obama during his two elections, and is known for his political involvement. Wolf is currently a public supporter of former Secretary of State Hillary Clinton for the Democratic nomination. Wolf told reporters that he merely met with Biden to discuss the typical, boring policy questions.</p> <p>Biden may be hedging his bets until he knows how strong of a candidate he really is, but the veep is running into crunch time for a decision.<br /> Photo: Official U.S. Navy Page </p>
Video: High Frequency Trading hurts the little guys
Hedge Funds
<p>"Creating an advantage for to an institutional user or a particular type of trader that disadvantages the retail investor is bad for the country, bad for the markets, and bad for the business," says Dick Grasso, former NYSE chairman and CEO. "The structure of the market today for major securities has been terribly hurt," Grasso says on Wall Street Week. The complex markets have become less transparent, hurting the average retail investor.</p> <p>&nbsp;</p>