Spy has encountered far too many people taking this whole Dry January thing far too seriously. Spy can happily agree to a dry-ish January (in principle), but cold turkey just gives him the shivers. Besides, Spy seldom gets juicy gossip from someone who is having the carrot-kale-ginger cleanser. Luckily Spy found one private banker who was shunning the healthy January trend (Spy thinks that contrarian thinking is a good start) who was willing to share a bottle of Penfolds plonk and his views on the industry. Well, the good news is that bullish sentiment reigns. Despite Hong Kong’s woes, there remained an air of general enthusiasm for 2020. Spy’s companion was convinced that one never bets against a US election year and, if anything, Iran’s rapid back down after last weekend proves how fleeting negative geopolitical sentiment can be. So, cheers to a good year ahead and may Spy’s indulgent friend be proven right.
Aberdeen Standard has had a change in its marketing team in Hong Kong, understands Spy. After nearly a decade at the firm, Wincy Mak has stepped down from her role as head of marketing for Hong Kong and China. Spy is not aware of a replacement for Wincy, if anyone. David Mitchell remains in charge of marketing in Asia-Pacific. Aberdeen Standard has had great success with is Technology Fund which rose nearly 40% over the last year.
Spy notes that Eastspring has made a new hire. Joyce Chan, who was previously at Pinebridge for more than 10 years, has joined the Singapore-headquartered firm to be head of its Hong Kong intermediary business. Joyce is a highly-experienced distribution executive and brings a wealth of knowledge to the firm, having also held roles at Allianz Global Investors and UBS. Spy has no news on who is replacing Joyce at Pinebridge. Eastspring has had success in the last year with its Greater China Equity Fund, up a healthy 22% in the last year.
It is the New Year and that means awards. Spy is not talking about the irrelevant ones such as the Golden Globes or the Oscars. No, it is FSA’s own annual fund awards that are coming up. The question many readers will ask themselves, is, “Are Asia’s fund selectors good at what they do?” The more cynical may even ask, “Are fund awards merely PR exercises?’ Spy, for one, is highly impressed with Asia’s selectors. FSA has back-tested last year’s award winning funds and found the accuracy percentage to be a shining 80%. The winning funds went through quantitative (from FE Fundinfo) and qualitative (from Asia’s fund selector judges) screening to narrow down 4000+ products to 56 winners expected to outperform their peers in 2019. It turns out, a rather excellent 80% of those 56 funds did exactly that and outperformed their peers last year. Spy suggests that the combination of fund selector input, FE Fundinfo data and the unique FSA Awards methodology as a whole, produces a meaningful result. Vitally, at the FSA Awards, there is no ‘pay-to-play’ whatsoever – one does not win an award for booking a table, for example…. Spy’s colleagues are publishing a full article about the back-testing on Monday on Fund Selector Asia. Take a look at it, and don’t forget, our 2020 fund award winners will be announced later this month.
For clients of OCBC Wealth Management in Singapore, OCBC started 2020 by promoting various funds in which they had high conviction – a few had variations in asset class. Unsurprisingly, all of those chosen had a reasonable, if not exactly stellar, 2019.
- Blackrock Dynamic Income Fund
- Fidelity Global Multi Asset Fund
- Fullerton USD Income Fund
- Lion Global Core Fund (Moderate)
- Schroder Asian Income
Looking at the list, Spy can only conclude that OCBC is convinced investment in 2020 does not require any thinking too far outside the box.
As the active asset management industry gets back to work this week, Spy is convinced that in their board rooms, C-suites and sales departments, discussions will be taking place on strategies to deal with the ETF Juggernaut (yes, it gets a capital J). Spy has some simple, if unwanted advice. Take a peek at the Blue Whale Growth Fund. It is a young, global, macro, long-only fund that has done very well. It is run by a chap called Stephen Yiu. Blue Whale, similar to Fundsmith and a few others, is highly concentrated with only 25-35 stocks. That is it. The Blue Whale teams spends a lot of time researching and very little time trading. Spy is convinced that this is one of the few ways that active funds are going to outperform. Period.
How much longer are value investors willing to be the horse that gets beaten, wonders Spy? Value has underperformed growth for so long now, the divergence is almost a joke. Elon Musk became the poster child for this divergence in the first week of January. Consider this:
GM Net Income (TTM): +$9bn vs Tesla Net Income: -$0.8bn
GM Revenue(TTM): $145bn vs Tesla Revenue: $24bn
GM Market Cap: $50bn vs Tesla Market Cap: $89bn
The ratio of growth to value stocks in the US hit an 18-year high yesterday. There will be many value fund managers looking at 2020 and reaching early for a bottle of whisky. Spy strongly suspects that fund sales people will continue to have a hard time persuading sceptical investors that value is the place to be. 2020 may indeed surprise, but don’t expect the market to bet that way. At all.
If you are of a certain age, you will have, no doubt, had to dance at a wedding with an aunt or an uncle to the boppy tune, “Under the Boardwalk”. Spy for one has had to endure more than his fair share. Hong Kong is feeling more and more like a ‘board walk’ with the number of banks and businesses that are boarded up around the city. We all know the reasons for the current cautionary action by businesses. Spy would happily endure another evening dancing with a dubious aunt for Hong Kong to return to its normal, crazy, ebullient self.
Until next week…
