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Asia manager transitions into ‘China house’

Singapore-based APS Asset Management has decided to liquidate their non-China funds, as 90% of its AUM are in China-related strategies.
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Following a strategic review of the business, APS AM has decided to liquidate its Asia-focused funds and only manage China-related strategies, according to a statement from the firm.

“We decided after much deliberation and discussion that going forward, we would focus solely on China,” the firm said.

“Overtime, China’s significance both in terms of its share of Asia’s GDP and equity market capitalisation has greatly increased. APS’ client base has shifted in tandem with this growth.”

Founded in 1995, APS AM started as a manager focusing on Asia, according to the statement. The firm has four non-China equity funds, which include a Japan equity product, a Vietnam equity fund and two regional funds, according to data from FE Fundinfo. Collectively, the funds have $335m in assets under management, with the Japan strategy having the most assets ($169m).

The move does not mean the firm is cutting down costs. However, 90% of the firm’s AUM are invested in China-related strategies, which include China A-shares and equities listed in Hong Kong, Taiwan and the US, Mark Henry Brugner, president for Asia and Australia, told FSA. In total, the firm manages around $2.4bn in assets, he said.

“We are therefore exiting the other Asian markets and would be returning funds to our existing clients,” the statement said, noting that investors have the option to transfer their investments to one of the firm’s China strategies.

The firm does not have any China-focused funds registered with the Monetary Authority of Singapore, according to the regulator’s records. However, Brugner explained that most of the firm’s China-related assets are managed in segregated accounts.

Most of the firm’s clients are mainly large institutions, such as sovereign wealth funds, pension funds and foundations, according to Brugner. However, some of its clients also include distributors to private wealth clients.

Around 40% of APS AM’s clients are based in Europe, 30% in North America and 30% in Asia-Pacific, he added.

Management changes

Following its decision to be a “China house”, the firm’s portfolio managers who are managing the Japan and Vietnam funds will be departing APS AM, according to Brugner.

Wong Kok Hoi, who has been managing the firm’s regional products, will now solely focus on China strategies. Wong is also the firm’s founder and chief investment officer.

In total, the firm has around 16 investment staff, according to Brugner.

The firm will also be closing its Tokyo office, which was established in 2001, Brugner said. The firm has other offices globally, which include Singapore, Shanghai, Shenzhen, Beijing and New York.

China presence

The firm has been managing China-focused strategies for nearly two decades. For example, it launched its first China A-share strategy to offshore investors in 2004, after it established a research presence in Shanghai in 2002, according to the statement.

The firm is able to invest in China’s onshore markets via its inbound quotas, which include a qualified foreign institutional investor (QFII) quota of $230m, and a RQFII quota of RMB 1.5bn ($210m), according to records from China’s State Administration for Foreign Exchange.

In 2018, the firm started its onshore business in China when it received its private fund management (PFM) licence from the Asset Management Association of China (Amac). A PFM qualification allows foreign entities to develop and sell funds investing in onshore assets to domestic qualified investors, which include institutional and high net worth investors.

APS AM now manages three PFM funds in the mainland, according to records from the Asset Management Association of China. Only two Singaporean fund managers have the PFM qualification, the other being Fullerton Fund Management.

“We started our PFM business last year in order to offer domestic institutions the same long-term and disciplined investment approach as what we have been offering to offshore clients for almost 20 years,” APS AM’s Brugner said.

“We are selective in choosing appropriate local partners for new products,” he added.

Part of the Mark Allen Group.