Deutsche Bank launches 'robo adviser' for equities investors

DEC 8, 201512:20 AM

[FRANKFURT] Deutsche Bank has launched a computerised investment advisory service, seeking to keep up with other asset managers who have started introducing "robo advisers" to help certain clients create portfolios inexpensively.

Deutsche Bank's tool, dubbed AnlageFinder, uses questionnaires and algorithms to put together individual equities portfolios for customers of its branded online investment platform and was developed in cooperation with financial technology company Fincite, Deutsche Bank said on Monday.

In investment management, 'robo advisers' designed by internet start-up groups have begun to automate wealth advisory roles, calling into question face-to-face meetings and proprietary distribution channels, potentially threatening an important source of bank income.

Several large asset managers have started incorporating the technology.

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Among others, Charles Schwab earlier this year introduced free automated investment plans picked by computer algorithms that create portfolios of exchange-traded funds.

Fidelity has started using 'robo advisers' as a tool of its own investment advisory services, allowing it to decrease fees especially when dealing with less affluent clients, who would otherwise shun the conversations altogether.

In the medium-term, Deutsche Bank is also planning to have its asset management advisers use the tool in client meetings at its retail branches, the bank said.

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If you work your whole life, you're doing it wrong

• Chris Reining, Mr. Everyday Dollar

• Dec. 2, 2015, 10:13 AM
• 39,955
 
• 5

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Flickr / Mike McCuneThe author is not pictured.

I thought it was normal to hide in the back of a station wagon when my dad checked into a motel.

Growing up, the biggest vacation we took was to Disney World. We drove to Florida from Illinois, and to save money he’d reserve a room with two double beds for two people.

After he got the key, me and my two sisters would sneak into the room so the manager wouldn’t see us. We’d pack a sleeping bag and one of us would sleep on the floor.

I didn’t feel poor as a kid, but in my early twenties I started to realize some people spent money way differently than I was taught. Like a buddy who’d spend $100 buying women shots, or my coworker who got a new luxury car every couple years. I thought they were stupid, but it wasn’t long before I bought a BMW, dropped $200,000 on a condo, and started a new hobby – flying airplanes.

I get emails all the time from people like Karen. She wrote:

“I was going through a rough patch at work and feeling unhappy with where I found myself. More like put myself. I’m smart, I went to college, have zero debt, have a really great, well-paying job, and sincerely felt, “This is it? This can’t be it. Is this really how I want to spend the next 30 years?”

It’s easy to slip into a lifestyle where we work to earn, and earn to consume. I did this, and while it’s nice to have nice things, eventually more stuff doesn’t really make you any happier. And when you realize this, you have a choice: continue to live a life where you fill it with more stuff, or design a life filled with stuff that’s important to you.

WHAT CAN YOU DO WITH YOUR TIME THAT’S IMPORTANT?

Bronnie Ware spent years talking with people about to die. They all wished the same thing: that they had been happier, stayed in touch with friends, expressed their feelings, and hadn’t worked so much. Number one was: I wish I’d had the courage to live a life true to myself, not the life others expect of me.

What they’re saying is to live your life filled with stuff that’s important to you. Okay, where do I start? Ryan Holiday is one of my favorite people, and his article on deciding your why helped me build a framework around this. I asked myself what’s important to me, at first coming up with lame words like “freedom” and “flexibility.”

I dug deeper, and “freedom” became “time,” and “time” turned into the question “What would I do with it?” and that forced the answer:

• Work on what I’m passionate about, and not be motivated by money
• Have enriching experiences through travel
• Challenge myself, and continue to grow
• Have an impact on the greatest amount of people

Now, when I’m faced with a decision about a direction to take my life, or what goals I should set, this is the list I pull out to guide me, and the result is a life optimized for meaning and significance.

3 OPTIONS FOR FREEDOM

Mr. Everyday Dollar

You can design your life to make sure you have the freedom to pursue what’s important to you. The caveat is every one of these options requires a mindset shift: you need to work to earn, earn to save, and save to invest, so you can stop working.

MINI-RETIREMENT

Mr. Everyday Dollar

Many of you already do fulfilling work as teachers, social workers, or at non-profits. The pay sucks so you know you’ll never be a millionaire, but you still want a taste of freedom. A mini-retirement, a term popularized by Tim Ferriss in the 4-Hour Workweek, is perfect for you. Tim wrote:

“It is the anti-vacation in the most positive sense. Though it can be relaxing, the mini-retirement is not an escape from your life but a reexamination of it – the creation of a blank slate. This is also different from a sabbatical. Sabbaticals are often viewed much like retirement: as a one-time event. Savor it now while you can. The mini-retirement is defined as recurring – it is a lifestyle.”

I love this idea, and the execution is simple: you save up 1-12 months of spending money, and then go live your life. Travel through Southeast Asia, work on what’s important to you, or hike the Pacific Crest Trail.

30-YEAR RETIREMENT

Mr. Everyday Dollar

Most people work until their 60s for the conventional idea of a 30-year retirement. This includes plenty of TV, mall walking, and watching squirrels. The risk is a lot can go wrong between now and when you’re 65 — like you could die — and did you ever have the time to work on what’s important to you while you still could?

Money-wise, the conventional 30-year retirement uses what’s called a withdrawal rate of 4%. This means you can withdraw 4% from your savings and investments every year for 30 years, with little risk of running out of money. To figure out how much money you need for this, take your annual spend and multiply it by 25.

Example: if you spend $30,000 you need $750,000 ($30,000 x 25), or if you spend $80,000 you need $2,000,000 ($80,000 x 25).

EARLY RETIREMENT

Mr. Everyday Dollar

Early retirement is the definition of wealth, because you don’t have to work to finance what’s important to you.

You can use the same calculation for a 30-year retirement — annual spend multiplied by 25 — because you’ll probably earn money at some point either from hobbies or part-time work.

But if you truly want to retire early, like for 45 years and beyond, you use a withdrawal rate of 3.5%. To calculate how much you need for this, take your annual spend and multiply it by 28.5.

Example: if you spend $35,000 you need $1,000,000 ($35,000 x 28.5), or if you spend $70,000 you need $2,000,000 ($70,000 x 28.5).

MY CHALLENGE TO YOU

Like other dot-com millionaires, Elon Musk falls into the early retirement category. He couldget drunk every night, and spend his time traveling between his properties. But that isn’t what’s important to him:

“I’m interested in things that change the world or that affect the future and wondrous, new technology where you see it and you’re like, “Wow, how did that even happen? How is that possible?”

What’s important to him is solving big problems like space travel and multi-planetary living, so that’s what he’s doing. If you ask yourself what’s important to you and have a vague answer like “I want to be happy, and have a nice family, and be rich,” well, that doesn’t really mean anything.

Get a sheet of paper, and start writing down how you want to live. Then figure out the money part. Because when you do it this way, and you’re at the end of your life about to die, you’ll be able to say, “I’m glad I did that,” instead of “I wish I had.”

Read the original article on Mr. Everyday Dollar. Copyright 2015. Follow Mr. Everyday Dollar on Twitter.

MORE FROM MR. EVERYDAY DOLLAR:

• Screw College
• If You Work Your Whole Life, You’re Doing It Wrong
• How to Get Paid More with Penelope Trunk
• Find a Mentor to Get Ahead in Your Career
• How Unicorns Helped Me Beat the Market

SEE ALSO: Buying a house was the worst financial decision I ever made

This map shows ISIS’ expanding reach across Europe

• Pamela Engel
 
•  

• 1h
• 2,035
 
• 1

As ISIS loses ground in the Middle East, it has mounted attacks in Europe to convince the world of its strength, experts say.

But ISIS activity in Europe hasn't all been recent — the terrorist group (also known as the Islamic State and ISIL) has long had its sights set on Europe as a recruiting ground and target of attacks.

A new map from the Institute for the Study of War tracks where ISIS has hit, where its plots have been thwarted, where its supporters have been arrested, and where the group has targeted recruits.

The ISW notes that ISIS is "executing a campaign to terrorize and polarize Europe" and that the group has "inspired, resourced, and directed attempted and successful attacks in the United Kingdom, France, Belgium, the Netherlands, Germany, Spain, Bosnia, Kosovo, and Turkey since January 2014."

"ISIS aims to punish countries acting against it in Iraq and Syria," ISW notes. "It also seeks to polarize the West by inspiring state and social backlash against European Muslim communities. ISIS believes increased cultural strife will destabilize Europe and encourage Muslims to join it in Iraq and Syria."

ISIS has an extensive network of recruiters and supporters throughout Europe. These recruiters operate on social media and through in-person meetings to convince Westerners to migrate to ISIS territory in Iraq and Syria. ISIS also releases propaganda aimed at Western audiences to encourage supporters to attack Europe and the US even without any communication with core ISIS leaders. These calls to action have resulted in several successful attacks.

Here's a look at the map, which notes ISIS-coordinated attacks, ISIS-inspired attacks, ISIS targets, ISIS-linked arrests, heightened threat levels, and sources of foreign fighters who move to ISIS territory:

Institute for the Study of War

The map shows that ISIS has been particularly active with attacks in France and Turkey. France, Russia, Germany, and the UK serve as major sources of foreign fighters.

"ISIS will likely expand its efforts to direct and resource sophisticated terror attacks in Europe," the ISW notes.

"ISIS used its high-ranking Belgian-Moroccan military commander Abdelhamid Abouaad to coordinate multiple attack attempts in Belgium and France. ISIS may send similarly skilled individuals back to plan terror attacks there or in other historic European jihadist systems, including Spain and Morocco, Italy and the Balkans, or the Netherlands, Denmark, and Sweden. Interconnected human networks in each of these systems may capitalize on inadequate intelligence sharing across European borders in order to plan and conduct attacks."

Authorities have thwarted several alleged attack plots in the UK, France, Germany, and Turkey.France, in particular, has been on high alert lately after ISIS-affiliated attackers killed 130 people and injured hundreds more as they took hostages, detonated suicide vests, and shot dozens across Paris last month.

SEE ALSO: Obama in major Oval Office address: 'This was an act of terrorism'

NOW WATCH: Animated map shows the spread of ISIS through Iraq and Syria

More: Institute For The Study Of War Isis Islamic State Terrorism

Gold near 3-week high after US jobs data triggers short covering

Gold held near a three-week high on Monday, boosted by short covering after strong US nonfarm payrolls data bolstered the case for a Federal Reserve rate hike next week. 

PHOTO: BLOOMBERG

DEC 7, 201512:40 PM

[SINGAPORE] Gold held near a three-week high on Monday, boosted by short covering after strong US nonfarm payrolls data bolstered the case for a Federal Reserve rate hike next week.

With speculators holding record short positions in COMEX gold and the dollar failing to gain much traction post payrolls data, some believe gold prices could see more upside.

US nonfarm payrolls rose 211,000 last month, above market expectations and removing most doubts about the first Fed rate hike in nearly a decade at the central bank's next policy meeting on Dec. 15-16.

Spot gold slipped 0.2 per cent to US$1,084.46 an ounce by 0343 GMT, but held near the US$1,088.70 hit in the previous session, the highest since Nov. 16.

Gold gained 2.3 per cent on Friday after slumping to a near-six-year low earlier in the week.

Typically robust data would have sent gold lower as it would support a rate hike, but investors on Friday chose to cover their shorts. Higher rates tend to weigh on non-interest-paying gold by increasing the opportunity cost of holding it.

"If the dollar is unable to rally we may see further (short) squeezes towards US$1,095-$1,100 in the short term leading into next week's FOMC meeting," said MKS Group trader Sam Laughlin, adding that light profit taking was likely during Asian trade.

Hedge funds and money managers hiked their net short position in COMEX gold futures and options to 17,949 contracts in the week to Dec. 1, according to US Commodity Futures Trading Commission data on Friday.

The dollar index rose 0.8 per cent on Friday, but analysts believe the greenback's reaction to the jobs data was modest with the Fed set to hike rates next week.

Investors' focus has shifted to the pace of the tightening cycle following the initial move.

"Following another solid US labour market report, it is hard to think of anything that will now stand in the way of the Fed hiking next week," ANZ said, commenting on the overall markets.

"While the Fed's decision is shaping as somewhat of a done deal, how the market reacts to a Fed hike still contains an element of uncertainty. The logical reaction may not be what transpires, at least not initially," it said.

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Total boss rules out oil price recovery in 2016

DEC 7, 20157:23 PM

[DOHA] Oil prices are not expected to rise next year, the head of French energy giant Total told reporters in Qatar on Monday.

"We don't anticipate a recovery in 2016," Total CEO Patrick Pouyanne said on the sidelines of the International Petroleum Technology Conference (IPTC) in Doha.

"Having said that I don't know if the price will be at 40, 45, 50, 60" US dollars per barrel, he added.

"In 2016 the growth of capacity will still be larger than the growth of demand.

"I am not very optimistic for 2016, beyond that it is difficult to know." Oil prices have nosedived by more than 60 per cent in the last 18 months, with the world's largest oil producing nations defying calls to reduce output.

Crude prices fell heavily on Friday as West Texas Intermediate sank 1.0 per cent and Brent lost 1.9.

However, Mr Pouyanne added that Total had budgeted to meet the continued lower oil prices and ruled out any job losses in the near future.

"My job is to be sure that we can make profits whatever the price is," he told AFP.

"The good answer which we are working on in Total is to lower the break-even," he said, adding that the objective is to break even at US$60 per barrel in 2017.

Mr Pouyanne added that he was not surprised by OPEC's decision last week against slashing high output levels.

He added that he expected "non-OPEC supply" to contract next year.

"Non-OPEC supply will contract because US supply will contract from the middle of next year. From mid-2016 we should begin to see a contraction of US production," he said.

Mr Pouyanne is one of several big names from the oil industry attending the conference, including the CEO of Shell, Ben Van Beurden and Amin Nasser, the president and CEO of Saudi Aramco.

AFP

    
 

China's new growth drivers stand out as earnings beat estimates  

While Chinese President Xi Jinping's vision of an economy dominated by high-tech and consumer-oriented companies may be years away, they're already standing out from their old-growth counterparts when it comes to earnings. 

PHOTO: BLOOMBERG

DEC 7, 201511:01 AM

[NEW YORK] While Chinese President Xi Jinping's vision of an economy dominated by high-tech and consumer-oriented companies may be years away, they're already standing out from their old-growth counterparts when it comes to earnings.

About two-thirds of the 54 companies in Bloomberg's index of US-traded Chinese equities that have reported quarterly earnings since July exceeded analysts' projections. Approximately three-quarters of the gauge's members are technology and consumer-discretionary stocks. At the same time, more than half of 73 members of the MSCI China Index, which is heavily weighted with industrial and financial shares, missed earnings estimates.

That divergence comes as China's gross domestic product expansion is slowing to the weakest pace in 25 years. The government has ended its decades-long one-child policy to boost consumer spending and signaled that consumption and services will be at the center of its growth strategy. It has taken unprecedented steps - from subsidies to venture capital financing - to promote Internet, technology and innovation as growth engines.

The pattern in earnings can be a helpful guide for US investors, many of whom have reduced the total amount of money they have in Chinese assets and are considering areas that show greater potential for growth, according to Ella Ji, an analyst at China Renaissance Securities.

"The pie is definitely getting smaller," she said by phone last week. "But if they are investing in China, they'll certainly pick leading companies with solid earnings related to the new rather than old industries to offset the economic uncertainties."

Back in August, a rout in the mainland market wiped out more than US$5 trillion of equity value and also triggered a selloff of Chinese shares traded in the US. Technology companies have driven a 36 per cent rebound in the Bloomberg gauge of Chinese ADRs from this year's low in September. That compares with a 9.6 percent gain on the MSCI China Index from its bottom.

The MSCI China gauge rose 0.2 per cent at 10:32 am in Hong Kong.

The MSCI last month added 14 US-traded Chinese technology companies to some of its largest indexes, allowing a broader pool of investors to buy stakes in companies such as online retailer Alibaba Group Holding or search engine Baidu.

Their share prices are moving up in step with improved earnings. Chinese online travel retailer Ctrip.com International, education service providers New Oriental Education & Technology Group and TAL Education Group, and online game operator Netease were among the five best-performing ADRs since July 1, each rallying more than 20 per cent. All have reported better-than-expected revenue for the last quarter. 

"It's not that everything is great in the world or in China, but these are companies that are well positioned in the right sectors," said Gabriel Wallach, founder and portfolio manager at North Grove Capital LLC in Boston, whose largest holdings of Chinese companies is Ctrip.

"We're not betting on the old economy, or you want to call it industrial, to recover any time soon."

China's manufacturing conditions in November slipped to the weakest level in more than three years. Car service companies Bitauto Holdings and Autohome were two of the ten worst-performing stocks on Bloomberg's China ADR index, plunging more than 35 per cent since July 1. Both announced their fourth- quarter sales guidance lower than analysts' projections for the first time in a year, with gross margins dropping to the lowest level since 2015.

It's not all good news. Some investors worry that China's Internet sector is still at the stage of inception. Fierce competition is also squeezing profit margins as companies burn cash to gain market share. Hedge funds, for example, reduced their holdings of China's biggest e-commerce companies during the third quarter.

"Although investors are no longer taking China with an one- size-fits-all approach, it will take a bit of time for the technology sector to grow," said Chiheng Tan, an analyst at Granite Point Capital Inc. by phone from Boston. "Only when the scale of the industry becomes big enough, profitability and margins might catch up with pace of the revenue."

BLOOMBERG

China's budget airlines spread wings, add routes

      

Xia Lili, marketing chief at a privately-owned Shanghai software firm switched to flying with Spring Airlines after China's first low-cost carrier took off in 2010. 

PHOTO: NYCAVIATION.COM

DEC 7, 20156:49 AM

[BEIJING] Xia Lili, marketing chief at a privately-owned Shanghai software firm switched to flying with Spring Airlines after China's first low-cost carrier took off in 2010. Her company has since made it mandatory for staff to use budget airlines when available, and has cut its travel costs by a fifth.

Xia and her colleagues are among an increasing number of Chinese who are fuelling fast growth in what is often called the "last" big market ripe for low-cost carrier penetration.

Since late 2013, the Civil Aviation Administration of China has encouraged budget airlines as Beijing has seen how they have taken off elsewhere. Freeing up new routes for low-cost carriers also helps develop economic growth in western China.

Low-cost carriers account for 7 per cent of China's domestic air travel market, and that's expected to more than double by 2020, according to OAG, an aviation data and analytics company.

China, the fastest growing major air travel market, has overall passenger volume of 392 million, rising at more than 10 per cent a year, according to official data, and planemaker Airbus predicts it will leapfrog the United States as the world's largest domestic air traffic market within 10 years. "Low-cost travel has become a life style. Many of my colleagues would start chatting about how to get those 9 yuan (S$1.97) or 99 yuan (S$21.6) special offer tickets," Xia said.

As Europe's pioneer no-frills airlines such as Ryanair and easyJet mature and move more upmarket, they are attracting business travellers as a way to stand out in the budget crowd.

CUTTING COSTS

China's four budget airlines offer sharply discounted air fares to full-service carriers.

For example, West Air, a subsidiary of Hainan Airlines' parent HNA Group, offers a round trip from Chongqing to the popular southern resort of Sanya and a 3-night stay in a five-star hotel for just 999 yuan ($156), for bookings made well in advance. That compares with 770 yuan for the cheapest one-way ticket offered by full-service carriers, according to Ctrip.com.

In Europe, the cheapest budget airline return ticket for a similar flight - from Luton in England to Barcelona - without accommodation, costs 98 pounds ($148) on cheapflights.co.uk.

All of China's low-cost carriers, except newest entrant 9 Air, are profitable. Much of that is down to severe paring of their costs.

At China United, flight attendants clean up inside the plane between flights. The airline has squeezed more seats into its fleet of Boeing 737 planes, and turned one of the jets into a flying billboard, advertising Huangguoshu waterfall, China's biggest, said executive vice president Zhang Lanhai. With money from the local government, China United passengers are offered big discounts on hotels and tours in the area.

Spring Air, China's first and largest budget carrier, took out nearly all the light bulbs on the corridor to chairman Wang Zhenghua's office, and staff must turn off the lights when they leave for the day. Both the chairman and president eat at the staff cafeteria, and flight attendants share hotel rooms on trips.

The carrier on Thursday said it signed a US$6.3 billion deal to buy 60 A320neo jets from Airbus to help it meet rising demand, tap new markets and improve fleet fuel efficiency.

Spring Air has halved the size of the kitchen on some existing A320s to accommodate extra seats.

NICHE ROUTES

Attracted by the sector's growth potential, some state airlines have converted to low-cost carriers, and others are likely to follow suit.

This year alone, China Eastern Airlines converted its China United unit into a budget carrier, and Juneyao Airlines set up a low-cost subsidiary in Guangzhou. West Air converted in 2013, and Lucky Air, another HNA carrier, is also going through that transition. China Southern Airlines is also considering setting up a budget subsidiary, executives told Reuters.

The budget carriers have grown in part by flying routes that aren't covered by the bigger airlines.

China United, for example, flies to nearly a dozen cities in Inner Mongolia, more than any other carrier including Air China, which even has a branch there, said Zhang.

Because Inner Mongolia's transport network is still patchy, the quickest way to travel from one city to another is often to fly around 500 km to Beijing with China United and connect there to a flight to the Inner Mongolian destination. "More and more people are doing this because it's faster and cheaper," said China United's Zhang.

Spring Air, which also flies to popular Asian leisure destinations, started flights in late October to Dongyin, an oil-rich city in eastern China whose only connection to Shanghai was previously by a lengthy bus trip and then by high-speed rail. The maiden flight was packed, a company executive said.

Frustrated at not having enough slots at Beijing International Airport, Spring Air offered passengers free high-speed rail tickets to Shijiazhuang airport nearly 300 kms away, where it has better slots and offers more flights.

As more Chinese take to the skies, one challenge for the budget airlines is to manage passenger expectations.

Air travel has always been seen as a mode of transport for the privileged in China, and some passengers have been unhappy about meals and leg-room or when asked to pay for luggage or in-flight drinks.

But 9 Air's marketing chief Huang Hui says: "Some passengers who initially complained keep coming back."

REUTERS