Wipro to buy Viteos Group for $130 mn to strengthen capital markets portfolio

Wipro

IT major Wipro on Wednesday announced that it has signed a definitive agreement to acquire Viteos Group, a BPaaS provider for the Alternative Investment Management Industry for $130 million.

The company said in a release that the acquisition will expand Wipro’s capital markets portfolio in fund accounting services and enhance company’s Business Process Services capabilities.

Viteos’ proprietary platform, which offer transformation and integration of psot-trade operations can be leveraged to launch solutions across oter segments of Capital markets. These technology-based solutions will bring in non-linear and higher revenue realisation.

Viteos Group was founded in 2003 and has presence in US, India, Europe, Cayman islands and Singapore.

The acquisition is subject to customary closing conditions and regulatory approvals and will be completed in the quarter ending March 31, 2016.

Wipro’s senior vice-president and head-business process services Nagendra Bandaru said, “We are excited to join hands with Viteos and expand our Capital markets portflit in fund accounting services and enhance our business process capabilities.”

Shares of Wipro were trading 0.22 per cent up at Rs 556.85 in early trade.

Why Global Investing Will Improve Your Portfolio

Metal globe resting on paper currencyLarge U.S. stocks have notched a mostly stellar performance since their post-financial-crisis rebound, beginning in March 2009. However, the same can’t be said for emerging market stocks.

The Financial Times Stock Exchange emerging index has declined about 15 percent over the past five years. The index tracks large- and mid-capitalization stocks based in 21 emerging markets.

The largest emerging-market country weightings in the FTSE index includeChina, India, Taiwan, Brazil, Mexico and South Africa. The index also tracks countries in Eastern Europe and the Middle East.

A number of factors determine whether a market is considered developed or emerging. For example, emerging nations often have fewer financial-market checks and balances, relative to those in developed countries. Banking and regulatory systems often lag, and these nations may be politically and economically unstable, at least to some degree. That adds up to investors demanding a higher return for taking more risk than with Apple (AAPL), Exxon Mobil Corp. (XOM), Microsoft Corp. (MSFT), Johnson & Johnson (JNJ) or General Electric Co. (GE).

Most investors understand intellectually that risk and return are related. But should they continue holding an asset class, such as emerging-market equity, that is suffering a prolonged slump?

“I believe that long-term, growth-oriented investors should have emerging market exposure,” says Ryan Wibberley, CEO of CIC Wealth in Gaithersburg, Maryland. “As the more developed economies continue to mature, the growth rates from these places are most likely going to be lower than the rates found in some emerging economies.”

In a diversified portfolio, all asset classes generally don’t move in the same direction at the same time. That lack of correlation tends to smooth returns, but it also worries investors who don’t like seeing any of their holdings heading south, especially over several years.

However, financial advisers say it helps to keep long-term goals in mind when evaluating any particular asset class. From there, an investor can determine what is appropriate for his or her situation.

“An investor with a long horizon and high risk tolerance can hold a diversified group of emerging market ETFs that filters companies for attractive attributes, such as low volatility,” says Chuck Self, chief investment officer of iSectors, anexchange-traded fund strategist in Appleton, Wisconsin.

Self says retirees, who frequently opt for income-paying investments, may find that some emerging-market funds fit the bill. For example, he cites the WisdomTree Emerging Markets High Dividend Fund (DEM) as an ETF containing high-quality companies that pay high dividend yields.

Scott Kubie, chief investment strategist at CLS Investments in Omaha, Nebraska, says investors who turn their back on emerging markets may forego gains over time.

“Emerging markets represent a large and important part of the investment universe. A portfolio without any emerging-markets exposure would not have investments in China, Mexico or much of Eastern Europe. Investors who pass up potential opportunities in emerging markets will miss out on the opportunities in these markets,” he says.

Kubie says that even with the recent outperformance of U.S. stocks, emerging-market equities have a 15-year track record of outperforming the Standard & Poor’s 500 index (^GSPC).

While the S&P 500 experienced the so-called “lost decade” between 2000 and 2009, emerging-market stocks outperformed. For the past five years, that situation has essentially been reversed. Proponents of globally diversified portfolios say that’s exactly why investors should hold different types of assets at the same time.

Patience, however, is always key when trying to stick with a portfolio tailored to one’s objective and risk tolerance. Investors often tinker with allocations that don’t perform as well as they’d hoped or expected. However, attempts to stem losses often result in missed opportunity as an asset class begins rising again.

Owning emerging markets equities can provide high returns to investors who exercise patience.

“Owning emerging markets equities can provide high returns to investors who exercise patience,” Wibberley says. “These asset classes tend to move quickly, and timing them is very difficult. The advantage of holding these stocks during a downturn is that you no longer need to be a market timing expert — which I have yet to actually meet one of these people. You capture all of the downside and all of the upside, which can be great.”

Advisers suggest keeping a long-term perspective on the current emerging-market underperformance.

“Unfortunately, the recent downturn was prolonged by strong decreases in the Chinese growth rate. This has happened to various countries as they attempt to emerge,” Self says. He says similar issues occurred with other fast-growing Asian nations in the early 1990s, and with Russia in 1998.

“Eventually, these stock markets have come back and hit new highs,” he says. “Trying to the time the move in and out of emerging markets is tricky, because you have to be correct when you sell, and you have to get back in before the market runs up. Unless they are guided by a rigorous quantitative model, very few investors can make both calls correctly and consistently.”

Even professional investors with a tactical approach say emerging-market exposure is often worth the risk. It comes back to a basic buy-low-and-sell-high philosophy. While investors always like that idea in theory, it’s not necessarily easy, in practice, to buy a beaten-down asset class.

“Holding an asset through a downturn is never fun. The real challenge is knowing when to exit and when to re-enter asset classes. Most investors, we find, are slow to take advantage of opportunities and slow to exit them when they turn. CLS’s approach is adjust the allocation to emerging-market stocks up or down based on market condition,” Kubie says.

“Right now, our approach is to emphasize emerging-market stocks in the portfolio because of their attractive valuations,” he says. “Emerging markets are cheap compared to most markets, especially the expensive U.S. market.”

Give Your Investment Portfolio a Stress Test

Senior Couple Talking To Financial Advisor At Home
When John Navin, a certified financial planner based in Nashville, Tennessee, meets a new client, the first thing he does is run his or her portfolio through a series of stress tests.

“We test the portfolio against 60 different circumstances that could happen in the economy,” says Navin, who owns John Navin & Associates. “It can tell us exactly what the portfolio will do.”

Navin and his team aren’t alone. Financial advisers have software to provide detailed analyses about how a portfolio will react as different scenarios unfold in the world. Will China’s slowdown turn into a recession or worse? Will the Federal Reserve raise rates half a point? Will the market turn down by 10 percent? Twenty percent? It’s important to know how your portfolio will react to these scenarios.

As stocks have ridden an almost seven-year bull market, there hasn’t been too much reason to know about potential disruptions to your returns. Even as Europe, particularly Greece, has struggled, the U.S. market has barely hiccuped.

But all good things do come to an end. And with slowdowns in the Chinese economy, the Fed considering interest rate hikes, weak oil prices and baby boomers leaving the workforce, there are concerns that the market could soon hit a speed bump. If it does, you should know how your retirement savings would move.

A stress test sets expectations. Testing your portfolio against a fall — or rise — based on real-world scenarios uncovers and highlights your risk if the worst happens. “Most people are taking on significant more downside risk than they think they are,” says Michael Reese, a certified financial planner and owner of Centennial Wealth, an advisory firm based in Austin, Texas.

While most of us think we’re comfortable with risk, it’s often not true. Many investors pulled out altogether when the markets fell into turmoil in 2008. This proved to be the worst decision possible, because investors left the market as it hit bottom. Within three to four years, they would have regained their losses, but they weren’t around to participate in the rally since the fall scared them off.

Stress testing shows what a 10 percent drop in the market will do to short-term gains, allowing you to understand what the loss may mean, Reese says. “If you see where you’re at, and it’s not a position you’re comfortable with, then you need to revise the portfolio to take the risk off the table.”

This is another reason why advisers run these scenarios. If clients see the market drop, their initial call will be to their money manager wondering what they should do. If advisers prepared them for such a scenario, then the drop is not as likely to draw that gut urge to react.

Test your whole portfolio, then test individual buckets. You want to test your whole portfolio because an event could affect parts of your portfolio differently. While a drop in energy prices could hurt the energy companies in your portfolio, it can also help many sectors that benefit from lower energy costs, for example. Yet, you would still want energy company exposure if prices rise again. You won’t see the overall impact, unless you test it all at once.

Navin begins by testing a portfolio as one cohesive unit. Then he breaks it down, examining areas that his customers typically have money in, including cash and income-generating devices such as annuities, equities and bonds. By testing each individual bucket, he can discover the impact of fees.

This fee analysis can “factor in the management fees, cost of turnover and impact of taxes,” Navin says. “You can really come back with a clear number.”

It’s important because over the long term, fees destroy a portfolio better than nearly any other factor, including short-term tumbles in the market.

Be careful how you react. Stress testing can serve many benefits, including providing data about your risk tolerance and setting clear expectations for your returns. But if you react wrongly to what you discover, then it could cause damage to your portfolio that you may never recover from.

For instance, someone in his or her 30s or early 40s probably still has one goal: Save as much as possible. Movements in the market shouldn’t have any impact on this person’s long-term strategy. “If you’re well in your savings mode, then stress testing your portfolio is a fun exercise,” Reese says. “But it’s better to put your blinders on, [place] your money into an allocation, then letting it go.”

On the other hand, if you’re within 10 years or less of retirement, stress testing can dramatically change your strategy. Those thinking they wanted to retire shortly before the 2008 downturn hit had their plans cut short. The recession delayed retirement for many older Americans, and the number of 62- to 64-year-olds in the workforce actually increased during this period.

“When something happens that close to retirement, it can mess with your plans,” Reese says. For near-retirees, stress testing can help this planning.

Don’t test too often. Most financial advisers use two models to test their clients’ portfolios. They judge them against historical numbers – like what would happen if another dot-com crash occurred – and they measure against hypothetical scenarios. Test both.

To get a comprehensive analysis, it’s best to go through your adviser. But HiddenLevers also offers software that many advisers use to run the scenarios. There’s a free account on its website, which will allow you to test different situations based on your portfolio allocation.

In terms of how often, Navin runs scenarios for clients once a year. Anything more, and you might be looking for a reason to make a change when there isn’t any. Unfortunately, there’s no scenario to test that mistake.

You’re Running Out of Time for Your 2015 Tax Planning

Person filling tax returns before deadlineA few months ago, we suggested getting your tax strategy together before it was time to panic.

Well, it’s time to panic.

We’re less than a month to the end of 2015 and any plans you have to lessen your tax hit by the end of the year should probably be implemented now. Rebecca Pavese, a certified public accountant, financial planner and portfolio manager with Palisades Hudson Financial Group’s office in Atlanta says that, at the very least, you should be calculating your income, tax payments and deductions to date, and estimating your totals for 2015.

“You need this baseline information before making any moves,” she says.

Once you’ve done that, the easiest way to save is by reducing your taxable income. Bankrate’s (RATE) Kay Bell notes that boosting your retirement savings can be particularly helpful. If you haven’t made your maximum $18,000 contribution 401(k) ($24,000 for people age 50 or older) or $5,500 contribution for an IRA ($6,500 for people age 50-plus), now is the time.

“If your employer permits you to make extra contributions to your 401(k), put in as much as you can afford.

“If your employer permits you to make extra contributions to your 401(k), put in as much as you can afford,” says Bill Ringham, vice president and senior wealth strategist at RBC Wealth Management. “You typically contribute pretax dollars, so the more you invest, the lower your taxable income. Your earnings also grow on a tax-deferred basis.”

Ringham also notes that 529 plan contributions are tax deductible in several states, so contributing to your kid’s college fund will allow your earnings grow tax-free, provided they are used for qualified higher education expenses. Just make sure it’s going toward college, however, as distributions not used for qualified expenses may be subject to income tax and a 10 percent penalty. Meanwhile, it’s also time to take inventory of your other investments in 2015 … and root for the losers.”Tax-loss selling can minimize or eliminate capital gains on one asset by realizing a loss to offset it,” Pavese says. “There’s dollar-to-dollar offset. If for instance you’ve had $5,000 of capital gains, you can offset them completely with $5,000 of capital losses.”

The best part is that you can carry those tax losses forward indefinitely. If you don’t need those losses to offset capital gains right away, you can use the excess loss to offset gains in a future year. That’s particularly helpful since net capital losses (capital losses minus capital gains) can only be deducted up to a maximum of $3,000 in a given tax year. Any losses beyond $3,000 must be carried over, which also makes it worth your while to consider putting off selling some of your “winners” until next year.”

“Capital gains can increase your adjusted gross income — and, consequently, your tax bill,” Ringham says. “So if you are considering selling an asset that has increased in value, such as a stock, you may want to wait until January so the gain will be realized next year.”

If you’re in a really desperate situation, there’s also a chance you can just give some of those investments away. Highly appreciated stocks or mutual funds you’ve owned for more than one year can go directly to a charity, so if you’ve purchased shares for $1,000 and they are now worth $10,000, giving those share to a qualified charity would give someone in the 28 percent tax bracket a $2,800 tax deduction, based on the current market value of the donated shares.

“You benefit three ways,” Pavese says. “First, you’re doing good. Second, you won’t pay the capital gains tax you’d owe if you sold the security instead. And third, you’ll get a deduction if you itemize.”

Once all of that is complete, you’ll want to consider doing some housekeeping.

Bankrate’s Bell suggests homeowners submit January mortgage payment and property taxes by Dec. 31 so they can deduct the interest for 2015. Also, if you haven’t taken advantage of your flexible spending account for health care, now is a great time to schedule doctor’s appointments or buy eligible supplies ranging from glasses to knee braces to cold medicine. Pavese, meanwhile, suggests filing a new W-4 form with your employer and adjusting your December tax withholding just to keep from running afoul of penalties and interest. However, just about anything you can do to lower your adjusted gross income is helpful.

“Lowering your income has many potential benefits,” she says. “If you can lower your taxable income to below $74,900 for a married couple filing jointly or $37,450 for a single filer, you will pay zero percent federal tax on sales of assets you’ve held longer than one year and zero percent on dividends. Even if you can’t get your taxable income quite so low, you may be able to lower it enough to step down to the next lowest capital gains tax rate.”

Lowering income can also lower deduction hurdles that are calculated as a percentage of that income. For example, unreimbursed medical expenses can only be deducted if they exceed 10 percent of adjusted gross income, and investment expenses must exceed 2 percent. However, if you can’t adjust to a desirable level for 2015, now is the time to start banking deductions for 2016. Pavese suggests that, instead of paying your estimated quarterly state income tax by Dec. 31 and deducting it on your 2015 return, you can pay it Jan. 1-15 and get a 2016 deduction. Also, if an additional deduction would trigger alternative minimum tax, pay your fourth-quarter state income tax and real estate tax installment in January.

“If your bracket will go up next year, consider deferring certain deductions, such as state taxes and real estate taxes, so you can claim them on your 2016 return,” Pavese says. “The higher your bracket, the more the same deduction can save you.”