Not only was this the strongest year on record for bankers, but the three largest quarters for banking fees all occurred last year.
The second quarter of 2020 led the way, setting the all-time fee record for a single quarter at US$35.7 billion.
Both debt and equity underwriting fees hit record levels in 2020.
Debt revenues rose 25% year over year, and equity fees jumped by 78%, “bolstered by a resurgent market for IPOs and record follow-on and convertible bond issuance,” Refinitiv said.
The strength in underwriting fees was tempered by a 4% decline in M&A advisory fees, and an 8% drop in syndicated lending revenues, the firm reported.
The financial sector was the biggest contributor to investment banking fees, representing 29% of global revenues (US$37.0 billion), which was up 13% from a year ago.
The industrials and tech sectors ranked second and third, respectively, at US$13.4 billion and US$11.3 billion, both up by around 30% from the previous year.
While the investment banking fee pie grew considerably last year, it was also increasingly concentrated. Refinitiv reported that the top five firms in the world increased their combined wallet share by 2.3 percentage points to 30%.
JP Morgan remained atop the industry league tables, generating US$9.2 billion in global fees (representing a 7.2% market share).
Goldman Sachs ranked second, with an estimated 6.5% of global share. BofA Securities placed third, followed by Morgan Stanley and Citi.
RBC Capital Markets remained the top-ranked Canadian firm, but it slipped to 14th place in Refinitiv’s overall rankings from 10th place last year.
Source: – Investment Executive
Big Investment Firm Bought Up Gold Stocks and Microsoft. Here’s What It Sold. – Barron's
An investment firm owned by a royal family recently made major adjustments in its investment portfolio.
LGT Capital Partners, which is owned by the Princely House of Liechtenstein, bought up gold stocks
(ticker: NEM) and
(MSFT), while selling
(SWI) shares in the fourth quarter. LGT disclosed the trades in a form it filed with the Securities and Exchange Commission.
LGT, which manages $65 billion in assets, didn’t respond to a request for comment on the stock transactions.
LGT bought 340,410 additional shares of Newmont in the fourth quarter to end 2020 with 1.4 million shares.
Newmont stock surged 37.8% in 2020, and so far this year, shares have risen 3.1%. In comparison, the
S&P 500 index,
a measure of the broader market, rose 16.3% last year, and has risen 2.3% year to date.
Newmont is one of Barron’s top stock picks for 2021. “Gold remains a good hedge against ultraloose monetary policies worldwide and possible higher inflation,” we wrote.
The investment firm bought 769,890 more American depositary receipts of South African-based miner AngloGold to end the fourth quarter with 1.9 million ADRs.
AngloGold ADRs managed to eke out a 1.3% gain in 2020. So far this year they are up 2.6%.
In November, AngloGold halted operations at an Argentina mine for 10 days following the detection of Covid-19 cases among its workers. In December, AngloGold said that strong cash-generation will support a sharply higher dividend payment. Also that month, BMO Capital Markets analyst Raj Ray upgraded AngloGold to Outperform from Market Perform. “[W]e see some potential near-term positive catalysts that could drive share price performance,” Ray wrote in a research report.
Microsoft stock surged 41.0% last year, and so far in January it is up 1.6%.
Microsoft has benefited by focusing on the cloud, a move that paid off as the coronavirus pandemic pushed office workers to work from home, creating a critical mass of remote workers. Last week, the software giant announced an investment in
’ (GM) self-driving-car unit Cruise.
LGT bought 299,720 Microsoft shares in the quarter to end 2020 with 1.2 million shares.
The investment firm also sold 90,000 SolarWinds shares to end the year with 430,000 shares of the provider of IT infrastructure management software.
SolarWinds stock crumbled in December after the company disclosed that it was the victim of a cyberattack. Shares ended 2020 with a loss of 19.4%, but they are up 6.6% so far in January.
In January, J.P. Morgan analyst Sterling Auty wrote in a report that SolarWinds stock was “an attractive opportunity” for those tolerant of risk.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Does Bitcoin have a place in every investment portfolio? – Global News
Some investors have long believed everyone should allocate some of their portfolios to gold or other commodities. Gold, goes the argument, helps protect your investments from inflation and stock market drops.
Now some are arguing the same thing about Bitcoin.
“My personal belief is allocating to Bitcoin is a logical approach and should have a role in everyone’s portfolio, in the same way that many people believe gold or commodities should, as a diversifier,” Meltem Demirors, chief strategy officer at cryptocurrency investment firm CoinShares, recently told Barron’s Streetwise podcast.
But to what extent is the world’s most popular cryptocurrency similar to the world’s best-known safe-haven asset — and do investors truly need to have gold in their portfolios, anyway?
Teen allegedly behind large Twitter hack eliciting Bitcoin facing 30 felony charges
Bitcoin: a bit like gold but with ‘huge volatility’
The economic downturn triggered by the COVID-19 pandemic has re-ignited inflation fears among some investors.
Many central banks, including the U.S. Federal Reserve and the Bank of Canada, have been increasing the amount of money in circulation in their countries as a way to stimulate economic activity. The playbook is similar to the one central banks turned out during the global financial crisis of 2007-08.
And now, like back then, some fear this kind of monetary policy will eventually fuel inflation.
“The usual idea is that the money supply increases, then people just have more money in their hands and prices will go up,” says Andreas Park, associate professor of finance at the University of Toronto.
Consumers flush with cash, in other words, can end up bidding up prices, causing inflation.
Grocery store owner takes action as Bitcoin machine used repeatedly to pay scammers
Park doesn’t think fears of rampant inflation are justified. Economies like the U.S. and Canada haven’t seen high inflation since the 1980s, he notes.
But investors who worry about inflation often look to gold as a way to hedge against it. While central banks can dial up the amount of money in circulation, there is only a limited quantity of gold available in the world.
“You have to mine it if you want to add to it,” Park says. “It cannot be inflated.”
The same is true of Bitcoin.
The digital token, which was intended to be an alternative to inflationary national currencies, was designed to have a maximum cap of 21 million coins. New coins are created only as a reward for “miners,” users who employ computing power to record and validate crypto transactions.
So far, around 88 per cent of bitcoins have been mined.
And as with gold, there is little use in the real world for Bitcoin, Park says. You can use gold to make jewelry, for electronics, or as a collectible. And you can use Bitcoin to pay for some goods and services if you find a seller willing to accept crypto. For the most part, gold and Bitcoin are only worth what buyers are willing to pay for them.
Money 123: Canadians could be losing a lot to investment fees
Some people also buy Bitcoin, like gold, as an investment that’s not going to be correlated with the performance of the stock market, says Robb Engen, a financial planner and author of the popular personal finance blog Boomer and Echo.
Gold is commonly touted as a safe-haven asset, an investment that will retain or increase in value during times of market turbulence.
But both as an inflation hedge and as a safe-haven investment, Bitcoin comes with “huge volatility,” Park warns.
While gold itself is volatile, Bitcoin’s ups and downs dwarf the precious metal’s price swings, Park says.
On Friday, Bitcoin was trading at around US$32,000 ($40,700), more than 20 per cent below the record high of US$42,000 ($53,500) hit two weeks ago, losing ground amid growing concerns that it is one of a number of price bubbles and as cryptocurrencies catch regulators’ attention.
Traders also blamed the sell-off on a report posted to Twitter by BitMEX Research suggesting that part of a bitcoin may have been spent twice, even if concerns were later resolved.
The pullback still leaves the cryptocurrency some 700 per cent above its 2020 low of US$3,850 ($4,900) hit in March. The dizzying rally has been partly driven by large investors, with a number of Wall Street firms making moves in the crypto space.
JP Morgan Chase, for example, has created and tested its own digital token, JPM Coin, despite CEO Jamie Dimon having been a vocal critic of Bitcoin in the past. The investment banking giant has also started offering banking services to two well-known crypto exchanges, Coinbase and Gemini Trust.
And Paypal announced in October that it would enable U.S. account holders to buy, hold and sell cryptocurrency. Derivatives marketplace CME Group and Fidelity Investments Inc. also offer services that allow for buying and selling crypto assets.
Money 123: Should you use a robo-advisor to invest?
Placing a bet on Bitcoin
Engen sees both gold and Bitcoin as speculative investments. Investing in cryptocurrency may also be a way to get exposure to a technology in its early days.
As with cannabis stocks pre-legalization and the dot-com boom of the late 1990s, investors can make big profits by pouring money into a new industry in its infancy, he says. But with that comes the risk of steep losses when the boom goes bust, he warns.
“By all means, you could use five per cent of your portfolio to make a bet,” Engen says. “But you have to go into it with your eyes open.”
You could lose most of your investment, he warns.
If you do want to dabble in speculative investments, you’ll need to start out with some clear ground rules in mind and stick to them. For example, committing to having no more than five per cent of your investments tied up in volatile crypto assets implies you’ll have to sell a lot of your holdings if they surge in value, which means they’d be taking up a larger share of your portfolio, Engen notes.
But it can be hard to bring yourself to sell investments that saw skyrocketing growth, he adds.
Early success with speculative assets may lead you to believe “you are good at this,” when, in fact, it was just luck, he says.
— With files from Reuters
© 2021 Global News, a division of Corus Entertainment Inc.
A new era of low-cost investing has arrived for Gen Z and millennials – The Globe and Mail
Words they live by in the investment industry: Small accounts get small consideration.
So it follows that the record of investment firms in welcoming young people as customers was pretty terrible until recently. The rise of digital investing – taking orders and sometimes providing advice online or via mobile device – has changed all that for the better by making small accounts more economical to serve.
Suddenly, there are all kinds of ways for young adults to get started as investors while keeping their costs to a minimum. There’s a free stock-trading app, and another app with zero commissions for investing in exchange-traded funds. Several online brokers offer special pricing for young clients that can reduce their costs significantly, and there are also robo-advisers to consider.
With a six-figure portfolio, paying $5 to $10 to buy stocks or exchange-traded funds is nothing to complain about. But for a young investor with a small portfolio, these costs are prohibitive. Biweekly purchases of a balanced ETF (more on these in a moment) at $9.95 per trade works out to an annualized fee of 1.7 per cent on a $15,000 account. For context, the bonds or bond funds in a portfolio might yield about 1 per cent these days.
Further costs for young investors might include annual administration fees of $100 or more for registered retirement savings plan accounts or $100 in account maintenance fees per year (often charged on a $25 per quarter basis).
Special deals for young investors are available at several online brokers, but they’re not well-publicized and thus easy to miss out on. Some examples:
- For students, CIBC Investor’s Edge reduces its regular flat $6.95 commission for trading stocks and ETFs to $5.95 and waives the $100 annual fee on registered and non-registered accounts.
- For investors 30 and younger, National Bank Direct Brokerage provides 10 free trades a year and then lowers its regular price of $9.95 per trade to $4.95; also, account admin fees are waived.
- For investors aged 18 to 30, Qtrade Investor offers a flat commission of $7.75, down from the usual $8.75, as well as waiving quarterly admin fees.
- For clients 25 and younger, Scotia iTrade will waive the $100 annual admin fee on RRSPs and the $100 per year maintenance fees on small non-registered accounts.
- The Kick Start Investment Program at Virtual Brokers allows an investor to buy (or add to) up to five ETFs each and every month, for no commission. Normally, the cost is $50 a year for this service, unless you’re a student or have graduated within the past two years.
Do-it-yourself investing happens to make great sense for young investors. Investment advisers are notoriously uninterested in young clients for the most part, unless they happen to be the kids of rich clients. Also, the needs of young investors may be too small-scale to justify the fees advisers charge.
Bank mutual funds are an easy way to get started investing, and they’re friendly to rookie investors because they can be bought at no cost. On the negative side, bank mutual funds too often combine lacklustre returns and hefty fees.
The ideal product for young investors? Consider the balanced ETF, with fees as low as 0.2 per cent (mutual fund management expense ratios are typically in the 2-per-cent-plus range).
Balanced ETFs hold underlying funds that produce blends of stocks and bonds suitable for conservative, middle-of-the-road and aggressive investors. A twentysomething could easily choose an aggressive approach, with the understanding that there will be rotten years on the way to good long-term results. Long term, by the way, means 10 years or more.
The Wealthsimple Trade app is a zero-commission way to buy and sell balanced ETFs, as well as other ETFs and stocks. The lack of commission costs invites frequent stock trading that eventually does more damage than good, but a disciplined investor could use it to stuff money into balanced ETFs on a regular basis.
TD GoalAssist, from Toronto-Dominion Bank, is another app for mobile devices that offers a cost-effective way for young people to invest. Pick one of TD’s own balanced ETFs and contribute money whenever you like with no commissions to pay. GoalAssist also lets you set investing goals and track how you’re progressing.
Robo-advisers are another way for young adults to get help in building diversified ETF portfolios. For a fee starting at roughly 0.5 per cent, a robo-adviser will assess your needs with an online questionnaire and then suggest a diversified grouping of ETFs. Investing is a simple matter of electronically transferring money to your robo-adviser, which then contributes it proportionally to the ETFs in your portfolio.
Robo-advisers typically have lower fees for larger accounts, but a young investor still gets a fair deal.
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