Page 25 - Aruba Today
P. 25
BUSINESS A25
Friday 27 November 2015
Brazil banker Fund manager Q&A:
arrest sending
shares lower USAA’s Matt Freund defends strategy of holding cash
M. SAVARESE STAN CHOE Matt Freund, chief investment that) economic activity will 6 percent for returns.
Associated Press AP Business Writer return to normal, will accel- Q: And stocks don’t look
RIO DE JANEIRO (AP) — NEW YORK (AP) — Some- officer of USAA’s mutual erate. good at all?
When IT specialist Andre times the best choice is to Q: So stocks don’t look like A: Let’s say that you are
Esteves decided to leave make none at all, particu- funds, poses for a photo. the better investment ver- the perfect, rational inves-
Swiss bank UBS in 2008 to larly when all the options sus bonds? tor who invests without any
refound bank Pactual, he look risky. When deciding whether to A: People implicitly make emotions. Or you’re going
added BTG to the com- So if you’re deciding the assumption that the to program the computer
pany’s name to symbolize whether to invest in stocks, invest in stocks, bonds or market owes them a good to do it. If you told the com-
that he was “back to the bonds or something else, choice. puter, “My time horizon is
game.” Later, as a darling remember that you could something else, Freund says People always talk about five years or 10 years,” it
of the financial markets, he leave some of it in cash. So how you need to buy stocks would put you in stocks. It
jokingly said that the acro- says Matt Freund, chief in- it’s fine for investors to hold today because they’re a would put you in emerging
nym actually meant “bet- vestment officer of USAA’s TINA - there is no alterna- markets.
ter than Goldman” Sachs. mutual funds. cash. (USAA via AP) tive. And I completely dis- But if you said, “Look, I’m
On Thursday, though, Es- He says stocks are likely agree. Stocks may beat really a six-month investor,”
teves, one of the wealthi- due to deliver lower re- cent corrections are going cash or bonds. But that the offered returns don’t
est men in the country, he turns than before, maybe to be much more com- doesn’t mean you’re be- compensate for the risk,
completed his first day in 7 percent annually, partly monplace. They’re not go- ing paid for the risk, and and it would keep you out
jail, accused of obstruct- because of how high their ing to be as newsworthy. that doesn’t mean it’s ap- of those markets.
ing a probe into corruption prices have become rela- Q: Aren’t stocks supposed propriate for you and your Q: Do you really think peo-
at the state oil company, tive to corporate profits. to do well, even after the time horizon. ple are investing in stocks
Petrobras. And as the Federal Reserve Fed starts raising rates? Q: What kinds of invest- with expectations to hold
Esteves, who denies all the gets closer to raising inter- A: Everybody talks about ments do you like? for just six months?
accusations, was arrested est rates, Freund expects how stocks typically don’t A: I actually do like high- A: People are exception-
at his home in Rio de Ja- price swings for stocks to peak until two or three yield. ally short term. Maybe it’s
neiro, sending BTG Pactual get bigger. Bonds, too, are years after the Fed begins Q: Don’t managers of high- for a year. But look at all
shares tumbling. likely to get more volatile. raising rates. Is that going yield bond funds always the articles that happened
On Wednesday, bank Instead of taking on a lot to happen this time? Is it say they like high-yield? in August. It was a 10 per-
shares dipped 21 percent of extra risk for only a little safe for stocks? Well, we’re A: If I gave you the choice cent correction. It was
on the Sao Paulo stock bit more return, the right not sure, but I suspect that of two asset classes, and long overdue. It was no big
market. On Thursday, rating choice may be to get it’s not. one was going to earn 7 deal. But it created a lot of
agency Moody’s said it was more conservative, says Typically, when the Fed percent and be really vol- worry and angst.
placing the bank’s ratings Freund, who manages sev- raises rates, the economy is atile, and the other was Q: That advice wouldn’t
on review for downgrade, eral bond mutual funds. accelerating. And at USAA, going to earn almost 7 per- have been any different 10
which triggered another He recently talked about while we’re not calling for cent but with a lot less vol- years ago, though, right?
session of losses for BTG. why it can make sense to a recession, we’re not call- atility, which one is better? A: Yeah, but people al-
The impact of the inves- stash some cash under the ing for an acceleration ei- I think that for the same re- ways seem to forget it.
tigations could be felt in mattress. The interview has ther. We think we’re going turns, take less risk. There’s nothing wrong with
every business related to been edited for length and to be seeing more of the Q: I assume the first choice holding some cash.
BTG Pactual, according clarity. same, where the economy is stocks, and the second Imagine you were that
to Silvio Campos Neto, an Q: How much more volatil- is kind of grinding along at is high-yield bonds. Can lucky person who was sit-
economist at consultancy ity should we be expecting very modest growth. they really produce nearly ting on a big stockpile of
firm Tendencias. “We don’t once the Fed begins rais- Stock valuations today are 7 percent returns? cash in August. Everyone
know yet how exposed they ing rates? not cheap, and they are A: The high-yield index is is running for the door. You
are. But the main risk is a A: We’ve already seen it. (based on the assumption yielding close to 8 percent. would have been very well
loss of confidence leading We saw it in August, when After expenses, it’s close rewarded for putting that
to cash flowing out. Then it people were trying to to 7. So then you have to money to work. But how
could affect others that are make a huge news story worry about defaults and do you get that dry pow-
related,” he told The Asso- about a 10 percent de- price swings. If you’re in- der? You have to pull back
ciated Press. “So far the risk cline for stocks. I think it is vesting for three to five when the market feels
seems to be under control. going to get worse. I think years, I think the ballpark is good, and that’s times like
But the market is vigilant.” these sorts of 5 and 10 per- in the low 6 percent to high now.q
In July last year, BTG bought
Swiss bank BSI for $ 1.68 bil- US new-home sales rebound in October after slip
lion. Esteves, 47, was re-
cently involved in a pend- JOSH BOAK nual rate of 495,000. This ery in the housing market,” in the Midwest and South.
ing operation to merge AP Economics Writer said Blerina Uruçi, an ana- Sales dropped slightly in
dominant cellphone carri- WASHINGTON (AP) — Sales rebound followed a 12.9 lyst at Barclays. The new- the West. But prices dipped
ers Oi and TIM in Brazil. BTG of new homes recovered home sales report tends last month despite other
has shares in construction in October after suffer- percent plunge in the sales to be volatile from month industry reports indicating
companies, online media ing a steep drop in Sep- to month. Downward revi- that real estate prices have
and many other sectors. tember, returning to this rate during September. sions lowered home sales eclipsed income growth. In
The bank tried to calm in- year’s trend of an improv- reported in September, October, the median new-
vestors with the appoint- ing market for real estate Americans recovered August and July by a com- home sales price fell 8.5
ment of Persio Arida, chair- developers and builders. bined 40,000. The Octo- percent from a year ago
man of the bank’s asset The Commerce Depart- much of their appetite ber figures reflected some to $281,500. The real estate
management unit and for- ment said Wednesday that geographical extremes. sector is still healing from
mer Central Bank governor, new-home sales climbed for owning new homes Home-buying surged 135.5 the bursting of the housing
as interim CEO.q 10.7 percent last month to percent in the Northeast, bubble and the 2008 finan-
a seasonally adjusted an- this year. Purchases have while rising less aggressively cial crisis.q
surged 15.7 percent year-
to-date, benefiting from
the solid hiring gains and
low mortgage rates. “We
still see new homes sales
consistent with a moder-
ate and sustained recov-
