Spy found himself in the frenetic city of Ho Chi Minh this week. If one needed reminding that the future is here in Asia, this is the place to feel it. Vietnam has a young, dynamic population and its communism is the thinnest of lacquer veneers. Drinking a cold Saigon lager in the Hotel Continental and chatting to some local bankers, one could feel the pulse of deal-making and money flowing all around. It felt like Hong Kong in 1980. James Clavell would be having a field day. Spy was mindful of recent comments on the country by Standard Life Investments’ EM fixed income manager, Mark Baker, “An economic revolution is underway and growth has been stellar.” You had better believe it, thinks Spy. And more importantly, find a way to invest there…
News has reached Spy that Aviva Investors has filled its wholesale sales role in Singapore. Charles Wong, formerly of Credit Suisse has joined the British asset manager. Aviva Investors has been growing its institutional distribution in Asia under Scott Callander. The asset manager, owned by British insurance giant Aviva, has developed a strong multi-asset capability over the last few years headed by Euan Munroe. Its AIMS fund was registered for retail distribution in Singapore a few years ago.
Hold on to your hats, says Spy. Chinese internet retail platform Alibaba blew growth predictions away this week, saying it expects sales to be 45-49% higher in the next year. The shares responded by jumping 11% on Thursday. However, they won’t be the only winners, reckons Spy. JP Morgan Asset Management’s Pacific Technology Fund has a high conviction position in Alibaba: 8.60% of the fund is invested in the company. HSBC’s China Momentum Fund is even stronger, holding just shy of 10% of the fund in Jack Ma’s brainchild. No surprise then that both of those funds are up more than 20% this year.
60 billion euros. It has nice ring to it, thinks Spy. That is the milestone that BNP Paribas has recently reached in Asia in both asset management and wealth management, respectively, according to their website. The French manager that all too often flies under the radar seems to have been gathering assets at a healthy clip for its asset management teams and its wealth management teams. What is selling? European Multi Asset and US Mortgage Backed Securities seem to be driving asset growth for BNP Paribas Asset Management. Meanwhile, Spy hears that BNP Wealth Management is heavily using ETFs in its discretionary models probably to the frustration of other active asset managers on the street…
What if you have a great fund but nobody notices because its name does not match a suitable box, wonders Spy. The temptation, when naming a new fund, to call it something interesting must be high. Take Swiss asset manager, Quaero. They have a top performing fund called the Family Enterprises Fund which is available in Asia, promoted by Peak Capital. The problem is, the fund selection and investor community don’t know what to compare it to and thus it gets overlooked. Solution: change the name of the fund. If you can’t beat ’em, join ’em. Spy understands that Quaero is renaming the fund to the duller, but far more recognisable, “European Smaller Companies”. It illustrates a paradox of our industry: everyone wants something different, but they also want it the same, thinks Spy.
Spy has noticed the active fund industry is beginning to fight back strongly against the swell of passive ETF investing. The fight back is taking several forms. (1) The narrative is being pushed that with passive you will only ever match the benchmark. Don’t you want the chance to outperform? (2) Much higher conviction portfolios. If you are a benchmark-hugging, backside-covering portfolio manager, perhaps think about a new career before HR delivers you a pink slip. (3) Active is highlighting areas where the benchmark is fairly meaningless – i.e. small and mid-caps everywhere, frontier markets, EM debt, etc. Spy, favouring human beings over dystopian machines is rather excited about this trend. Long live active!
“Psst, Psst…do you want to buy a little crypto?” What started as a geek-heaven innovation in arcane security technology appears to be underlying a gargantuan shift in financial transactions. Yes, Spy is talking about Blockchain and its better known derivatives, cryptocurrencies Bitcoin and Ethereum. The value of cryptocurrencies reached the milestone of $100bn in value this week and shows no sign of slowing down. While the US regulators squabble over whether cryptocurrencies are a commodity, a currency or something else, the rest of the world is moving on at pace. Funds are taking advantage of the enthusiasm. Swedish firm, XBT Provider, has a fund that exclusively invests in crypto and is listed on the Nasdaq Stockholm exchange. The volatility is not for the faint hearted, but Spy suspects this genie is well and truly out of the bottle. Expect to get more questions from clients and a whole lot more demand as this bubble swells.
Regular readers will know that FSA has been encouraging long-term investing, especially in funds. The general asset management narrative goes something like this: Asian investors tend to be too short-term, while Europeans invest for the long-term. Well, what’s this? News out this week from the UK says the average holding time for a fund has been decreasing over recent years. In 2005, the average holding time was about six years. Now, according to the UK’s Investment Association, it is only four years. In all fairness, Britain seems to be doing its best to shoot itself in the foot of late with Brexit, Scottish independence referendums and foolishly-called general elections. This decrease in investment duration simply adds to the UK’s woes, in Spy’s humble opinion.
It has not bypassed Spy that The French Open tennis final, enthusiastically supported by BNP Paribas, will take place on Sunday. Spy is predicting a Brexit battle with Rafael Nadal vs Andy Murray in the final. The winner? Place your bets on the Spanish boy from Majorca to complete his “Decima” and another chance for the Europeans to give Britain a good thumping.
Finally some outdoor advertising in Singapore, according to Spy’s team of tropical photographers. Janus Henderson, is out reminding the world of its newly-merged status. This was spotted in the “Let’s influence UBS spot” underneath One Raffles Quay:
Meanwhile, in Hong Kong Franklin Templeton is also getting all high-tech with a distinctly “Hitchhiker’s Guide to the Galaxy” robot. No news if it is called Marvin:
Also in Hong Kong, Allianz Global Investors has moved on from the US and is now favouring European equities in its MTR billboards:
Until next week…
