Rothschild Banking Families Battle, Bitcoin ETFs Gain Steam and JP Morgan Positions for 2024 in this Week's Edition...
Take a Lap Around the Industry
Rapid Private Credit Growth Raises Stability Fears, Regulators Say (Bloomberg)
Discover to be Acquired by Capital One in $35B Deal (CNBC)
Jeff Bezos Sells $8.5B in Amazon Stock (Bloomberg)
FOMC Worried About Being Too Aggressive with Rate Cuts (WSJ)
Rothschild Brand Fuels Growth Bid for Rival Swiss and French Banks
A turf war is intensifying between the Swiss and French branches of the storied Rothschild banking dynasty as they leverage the famous family name to vie for the same wealthy clients. After settling a dispute over name usage years ago, the privately held banks are now aggressively expanding into each other's territories across Europe, the Middle East, and Asia. With over $100B in assets each, Paris-based Rothschild & Co. and Geneva's Edmond de Rothschild Group remain small players in the global wealth management industry. But odds of an eventual merger are rising as confusion mounts among clients and pressures grow for consolidation. Resistance is led by Edmond de Rothschild's CEO, Baroness Ariane de Rothschild, though future generations may take a different view. For now, the rivals are riding the prestigious Rothschild brand as they wrestle over a bigger share of the $250 trillion global wealth management pie.
"They are now targeting similar clients...It’s very competitive and their centuries-old name is a big asset that they are both trying to leverage."
Christoph Künzle, Zurich University
Private Funding Pulse Check
Securing $7M in Venture funding, Hatch, an AI-powered jobs marketplace, has received backing from Sydney, Australia-based Alberts Impact Capital
DNS Capital, LLC recently took part in a Series C funding round, investing $102M in Recogni, a system solution company specializing in low-power AI inference
Altavo, an medical device startup producing artificial voices, has successfully closed a $5.5M Series A funding round, led by Occident Group AG
With a focus on producing a data-driven and consumer-centric travel platform, RailYatri.in, has attracted a $3.44M Series C investment from the Pierre Omidyar Family Office
Beyond Bitcoin: The ETF Industry's Next Major Move
The recent Miami ETF conference highlighted an issue that could prove far more consequential for the $8.4 trillion ETF industry than the launch of spot Bitcoin products regulatory approval of new share class structures. The structure would enable ETFs to be listed as a share class of broader mutual funds, bringing the tax efficiency of ETFs to the whole vehicle. With Vanguard's patent on the model expiring, asset managers like Fidelity and Dimensional have applied for permission. Approval could open the floodgates to thousands more ETFs, as the structure would let mutual funds launch ETF versions without overhauling their products to gain tax advantages. However, no deadline exists for an SEC decision. While ETFs have grown in popularity, mutual funds retain retirement plan dominance, so managers want the best of both structures. If approved, industry experts predict 20% of mutual funds may add ETF share classes, sparking the next wave of ETF growth.
"While spot Bitcoin ETFs are currently dominating the headlines, those products are simply a sideshow compared to the potential impact of the multi share class structure..."
Nate Geraci, The ETF Store
JPM's Positioning for Private Market Opportunities in 2024
With public markets rallying over 26% in 2023, JP Morgan sees potential for private equity, private credit, real estate, infrastructure and secondaries to deliver competitive returns and portfolio diversification benefits for clients in 2024. However, ongoing interest rate headwinds may impact leverage-reliant strategies, resulting in JPM suggesting a targeted approach. They see durable growth opportunities in private equity focused on secular trends like AI and healthcare, and attractive yields in private credit as banks tighten lending. In real estate, lower prices provide better entry points, though distress areas remain clear. Infrastructure stands to benefit from transitions to renewable energy and digital growth. Secondaries in particular may offer value as distributions fell to their lowest levels since 2009, forcing investors to sell existing commitments and creating discounts. Ultimately, JP Morgan's advice focuses clients on areas poised to capitalize on dislocations and need for financing.
"We see a sweet spot for private equity managers that use less leverage and focus their strategies on high quality companies that demonstrate durable growth. These managers often don’t need to rely heavily on rate-sensitive financing to take advantage of powerful thematic growth drivers."
Jay Serpe, JP Morgan
Family Offices Seek Crypto, But Avoid Locking Up Capital
Asia's family offices are looking to increase their allocations to digital assets, with liquid strategies garnering significant attention. A survey found 9% of offices not currently invested in crypto plan to initiate a position. Investor interest is being driven by positive developments like the launch of the first US spot bitcoin ETFs and Hong Kong's preparation to accept applications for virtual asset spot ETFs. However, macro headwinds have prompted a more conservative approach focused on liquid crypto funds and ETFs versus illiquid VC deals. Passive products like single-asset vehicles now account for 76% of institutional liquid crypto fund value. As competition heats up amongst firms planning to launch spot crypto ETFs in Hong Kong, management fees will be a key differentiator. Investors have evolved to emphasize portfolio management versus seeking outsized returns. With bitcoin's next halving approaching, some see potential for the industry to improve in the second half of 2024 as younger generations take over family offices.
"What we are observing is a trend where family offices already invested in the industry are planning to increase their allocations...Those who have been on the sidelines are showing an increased interest in understanding how allocating to digital assets can potentially reduce portfolio risk or enhance their real returns."
David Eisenhauer has launched a new independent RIA called Greykasell Wealth Strategies, based in Danville, California
Eisenhauer is bringing over his entire team from his prior firm, managing over $450M in client assets
Greykasell will serve high-net-worth individuals, families, and business owners in a fiduciary capacity
The firm will leverage Fidelity as its largest custodian and use their products and services to support clients (AdvisorHub)
Written by:
Andrew Popp | Sr. Research Associate
FINTRX delivers an industry-leading suite of private wealth data and research solutions to the alternative investment space and private capital markets. Engineered to help clients identify and access family office and RIA capital intuitively, the FINTRX platform ensures accurate and updated data and research on 850,000+ private wealth records globally. To subscribe to our newsletter and see previous versions click below.
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