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On the road: Miami and Mexico City selectors talk Trump's impact

Our relationship management team is constantly on the road meeting investors from across the Americas. This month Samantha gives us the lowdown on two of its hottest markets.

Rocio Harb of IPG Miami meets up with Samantha at her office

Samantha Muratori

Relationship manager, Citywire

Since our last issue in December I’ve made numerous trips to Miami. While I’m typically jetting off to Panamá, Chile or Uruguay, Miami remains a key spot for anyone involved in offshore fund selection, and the research we do there is paramount to our understanding of this community.

‘Cautiously optimistic’ is a phrase I heard over and over again when I’ve asked selectors for their investment outlook for 2017. There is a lot of hope that deregulation and tax reform will shape a new pro-market economy for the upcoming terms.

Despite such a muted summer with very little volatility, big financial institutions such as Itaú and UBS said they remain steadfast in their approach. They are not interested in increasing their exposure to risk assets in the upcoming months and continue to focus on the long-term gain for their clients.

Intercam and Bulltick, both of which have a majority of Mexican clients, anticipate expansion and growth even in if their clients may be more cautious than optimistic.

Investors are positive on the revival of active management in 2017. Many selectors agreed that the choice to go active depends entirely on the asset class. One portfolio manager noted that while they would use a passive strategy for large-cap equities, you absolutely need a good stock-picker for small caps and would choose active management every time.

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Samantha talking shop with Harumi Aoki of Santander Private Banking in Miami

Hot topic

Surprising no one, the topic everyone was talking about was how a Trump presidency will affect the US market and economies further afield. Most selectors agree that the Trump rally in the current stock market won’t last forever and they are expecting extreme volatility in the near future.

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Samantha with Intercam's Andres Somoza (left) and Javier Cortina.

Trending sectors

  • US small caps
  • Commodities
  • Smart beta funds

Popular groups

  • Pimco
  • MFS
  • BlackRock
  • EDM
  • Franklin Templeton

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Catching up with Hector Velex of Invex in Mexico City.

After spending a couple of weeks in Miami and a pit-stop in Houston, I made my way over to Mexico City, arriving there in the first week of Donald Trump’s presidency. Needless to say, the tone was very grim.

I found it fascinating hearing from brokers and private bankers who had such a powerful, raw reaction to the new US administration, but soon realized that this was a common and unified reaction among the Mexican investment community.

Clients from all types of institutions – private banks, Afores, broker-dealers and family offices – with different platforms and investment vehicles are all in the same boat.

Nobody predicted Trump would win, the peso would devalue and inflation would rise. One fund selector even joked, ‘With one tweet, Trump could destroy the Mexican economy.’

The uncertainty of the political relationship between Mexico and the US has left advisors feeling helpless. They have done their best to keep panicked clients at ease by explaining that their portfolios are focused on long-term growth and there is always volatility with political change.

Many portfolio managers have eased their clients’ nerves by showing them that they themselves are investing in the exact same funds and strategies.

With such a negative outlook, one fund selector even said that uncertainty is probably the only upside.

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Hot topic

With investment professionals recoiling from any risk-related investment, I have seen a big push to take advantage of currencies. The dollar has been stronger than ever and the peso has been steadily plummeting. Inflation has been high at 5.5% in Mexico.

On my final day, I heard that the Mexican Central Bank was investing a billion dollars back into the economy to salvage the peso.

Investors are turning to derivative investments to protect their clients’ money and there has been a push to invest in forwards, futures, and structured notes. ‘Dollarizando’ has become a significant theme for the Mexican client.

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Trending sectors

  • US infrastructure
  • Currencies
  • SIC ETFs

Popular groups

  • Pictet
  • Clark Capital
  • Exane
  • Franklin Templeton
  • Henderson
  • Goldman Sachs
  • JP Morgan

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Events
  • Citywire Santiago 2017

    Citywire Santiago 2017

  • Citywire Mexico 2017

    Citywire Mexico 2017

  • Citywire Miami 2017

    Citywire Miami 2017

  • Citywire New York 2016

    Citywire New York 2016

  • Citywire New York 2016

    Citywire New York 2016

  • Citywire Mexico 2016

    Citywire Mexico 2016

  • Citywire Mexico 2016

    Citywire Mexico 2016

  • Citywire Panama 2016

    Citywire Panama 2016

  • Citywire Latin America 2016

    Citywire Latin America 2016

  • Citywire Latin America 2016

    Citywire Latin America 2016

  • Citywire Miami 2016

    Citywire Miami 2016

  • Citywire Miami 2016

    Citywire Miami 2016

  • Citywire Panama 2016

    Citywire Panama 2016

  • Citywire New York 2015

    Citywire New York 2015

  • Citywire New York 2015

    Citywire New York 2015

  • Citywire New York 2015

    Citywire New York 2015

  • Citywire Santiago 2015

    Citywire Santiago 2015

  • Citywire Santiago 2015

    Citywire Santiago 2015