Spy was sharing several glasses of Burgundy from the Chambertin-Clos de Bèze region with some wealth managers in Wanchai this week. As the evening progressed from “gentle” to “enthusiastic” to “we-might-need-to-go-to-Ebeneezers-for-a-kebab”, the debate raged about whether wealth managers offer a good value service to their clients in Asia. As the rather disappointing Pinot disappeared in ever greater quantities, the conversation went from “We offer a great service at a good price” to “We charge what we can get away with for products that are flavour of the month that I would not buy myself”. As the English proverb says, “A drunk man’s words are a sober man’s thoughts”.
Spy notes in dispatches that James Lewis-Williams, who had been handing the development of Columbia Threadneedle’s Australian wholesale distribution business has stepped down. He has joined independent asset manager, PM Capital in Sydney in a sales director role, relocating there from Seoul. PM Capital’s global companies fund has had a rather good 12 months – it is up nearly 25% over the last year easily beating its MSCI benchmark.
Nothing quite calls the top of the market like consumers roaring in to buy. Spy noted on August 11 that although most of Hang Seng’s top performing sectors were equities, consumers were still buying income funds in droves – with nine of the top 10 funds sold at the bank being income funds. Spy checked Hang Seng’s most recent bestsellers this week, and, equities have found favour at last, with at least half the top 10 selling funds now equity-focused.
No surprise to Spy, after last year’s stunning rally, tech is being bought….One other change that Spy noted? In August, three of the top 10 were AB funds and this time it is Allianz Global Investors with a trifecta and no AB in sight…
In the category of “oldie but goodie” Spy spotted this picture that was doing the rounds and never quite seems to go out of favour. Many a true word spoken in jest, thinks Spy.
Who cares about ESG in Asia? Local asset managers may be further behind their US and European counterparts but a change at the Consultant level might accelerate Asian enthusiasm. Spy was told this week that several Consultants have made it clear that without an ESG framework, funds are going to be dropped from their recommended lists. Ouch.
Who says active is dead? If so, Schroders did not get the memo thinks Spy. The British asset manager posted its results this week with some excellent metrics. The venerable firm had nearly £10bn ($13.78bn) of net new flows in 2017. The group’s total assets are now £447bn. Schroders wealth management arm now has £45bn in AUM. Whilst other listed asset managers, for example Aberdeen and Standard Life Investments, and, Janus and Henderson, have felt the need to merge – Schroders has forged on alone. The 45% stake held by the Schroder family may make it hard for any potential buyer to acquire the firm, ensuring Schroders retains its independence.
Now that we have had some volatility, Spy is seeing an increasing number of reports about an X person who made a Y successful prediction years ago and has now made a (usually) dire Z prediction. In financial commentary, making one correct call seems to warrant treating the person with reverence. Spy’s request to his fellow hacks: next time you print a dramatic headline in the aforementioned manner, also check how many other predictions the person made that did not materialise. The article that got Spy thinking was a claim that “Hedge fund boss who predicted the 1987 stock crash warns of a selloff in bonds”. Yes, that is right, 21 years ago, Paul Tudor Jones made a good call. Now, in all fairness, Mr Jones may be right again but Spy is not 100% sure that a good guess nearly a quarter of a century ago is sufficient reason to sell all your bond funds…
If you have a portfolio full of European funds, you may want to keep a close eye on them. European politics is about to have a very messy weekend. The Italians go to the polls and voters seem intent on giving pro-EU parties a bloody nose. In Germany, the SPD will finally discover if its members want to join Angela Merkel in government or sulk in opposition and cause Mutti’s reign to end. And, finally, British PM Theresa May is going to waffle on about Brexit in a major speech today. Any of these events may be cause for some lively volatility in the euro. One firm that seems to be successfully navigating the European waters is Barings. The firm has had a good year on the continent – their European Growth Fund is up 33%.
Spy remembers that Superman is often referred to The Man of Steel. With Donald Trump’s latest announcement that he intends to impose steel tariffs on just about everybody, Spy suspects the orange-haired one also wants to wear his underpants on the outside. Spy thinks these protectionist instincts won’t help the global economy fly – let alone The Donald.
Spy’s photographers spotted a new tram with Taikang Asset Management’s branding trundling along in Central. The Chinese asset manager is promoting their New Opportunity Fund:
Until next week…
