Citywire Americas team visited Panama and Miami to uncover how the New Year has begun for investors across both offshore hubs. Latin America relationship manager Samantha Muratori went to Panama to find out how the country is redoubling its efforts to fight money laundering. Meanwhile, Crystelle Tapé, Citywire’s US relationship manager, returned to Miami to learn how recent events in Latin America have been affecting fund selectors’ client base and what 2016 has in store for them.

Miami

The past year has been a hard one to navigate for the US offshore industry and the world of active management.

While many sectors have performed poorly in 2015, technology was highlighted by fund selectors in Miami as being a strong performer. Many have also been using ETFs, with Blackrock’s iShares range proving popular. Other groups that were mentioned during my trip based on their strong performances were Franklin Templeton for their K2 fund, BlackRock’s equity unit, Henderson’s European equity funds and the quantitative products offered by Goldman Sachs.

Selectors also noted that there was a push from Latin American clients for more equity in investment strategies last year, showing a progressive shift away from traditional, conservative fixed income strategies.

The Miami-based fund selectors I spoke to unanimously agreed that the biggest effect of Janet Yellen’s rate hike has been to reassure them of the strength of the US economy. The question now is whether the US market will be strong enough for the Fed to raise interest rates in March.

Fund selectors’ main concern in recent months has been the political and economic changes occurring in Brazil and Argentina. The Brazilian government’s instability and scandals involving some of Brazil’s largest corporations, such as BTG Pactual and Petrobas, have led Brazilian clients to become more open to global investments and to explore options beyond their country’s borders.

Some predicted it will take a year or two for Brazil to regain political stability, and for that reason they don’t expect investors to put their money into Brazilian investments in the upcoming year.

Argentina is also facing big changes as currency controls were lifted on December 17, allowing the Argentine peso to have a fixed exchange rate. The future of Argentina’s economy will be an interesting one, as major changes in the political and economic leadership will impact the inflation rate and the development of the Argentine market.

The past year was largely a year of uncertainty, from the date of the Fed’s interest rate change to the unstable political and economic state of Brazil, Argentina and Chile. Hopes are high that 2016 will provide greater stability on both economic and political fronts.

Panama

Resting between the sparkling coastlines of the Atlantic and Pacific, Panama boasts one of the fastest-growing economies in Latin America and is an increasingly prominent location in the investment industry.

Panama’s average economic growth was roughly 8% from 2002 to 2013. With such a fast-paced economy, a central geographical location and US dollar currency, Panama has emerged as one of the most desirable Latin American locations for the offshore industry. Yet it has struggled in recent times because of perceptions of a poor record on money laundering control.

The OECD placed Panama on the Gray List in 2014 after deeming it deficient in the fight against money laundering and terrorist financing. For the past two years Panama has sought to improve the fundamentals of its financial system. It partnered with the Financial Action Group to build a stronger framework against money laundering, and its National Assembly passed a legislative proposal to fight money laundering.

With increased regulations and compliance, Panama has done what it can to exit the Gray List.

While in Panama, we were able to meet several private banks, independent advisory firms and a pension fund. When discussing fund names, the same names often came up: the MFS Meridian European Smaller Companies fund, BlackRock iShares ETFs, the Franklin Templeton Total Return fund, the T. Rowe Price High Yield fund and the Aberdeen Global High Income fund.

I was also in Panama for the Capamec Annual Golf Tournament, where Citywire joined numerous prominent financial institutions of the region in sponsoring the tournament, which took place at the Panama Golf Club.

Capamec is the Panama Chamber of Capital Markets, which exists to bring together the financial entities regulated by the Superintendencia del Mercado de Valores de Panama (SMV).