Your grumpy Spy found himself in Manila this week enjoying a cold San Miguel dark lager while chatting to the wealth management heads from several local banks. “We haven’t seen this much change to the business environment since the Yankees took control of the Philippines from the Spanish by the Treaty of Paris in 1898”, quipped one. “Drug dealers, illegal miners and casino owners are running scared, but financial services and infrastructure look very bright indeed. We might finally get that full fund passport scheme we have all been wanting”, intoned another. Love him or loathe him, president Duterte is shaking things up and may just give fund managers across the region another Thriller in Manila… Your grizzled Spy can but hope!
The man with the snappiest trousers and neatest beard in Singapore asset management has been given a top job, reads Spy. Hat tip to Christian Bucaro, the affable, espresso-loving Italian head of wholesale distribution for BNP Paribas Investment Partners who has been named Singapore CEO of BNP IP. Rumours abounded a few years ago that BNP IP would abandon its third-party distribution of funds and stick to its internal channels only. Spy understands that in Asia, Christian’s leadership has, in significant part, contributed to a major reversal of that thinking. A well-deserved bump to a more comfortable office, thinks Spy.
Spy notes that Chuck Ng, the former head of Southeast Asian distribution for Value Partners, has turned up at Manulife Asset Management in Singapore. He has been in the role for a few months. After a stint consulting to the industry, Chuck has returned full-time to focus on third-party distribution for the Canadian giant.
Vincent Leung, the former head of business development and alternate CEO of Luk Fook Wealth Management, has jumped ship to South China Wealth Management hears Spy. Vincent was involved in fund selection and product development at Luk Fook and also managed their sales teams. Spy understands he has taken on a similar role at the South China Financial Group WM unit, which serves the Chinese market particularly well.
Spy keeps an eye on Asian asset management alumni. He has heard that Mike Gibb, former head of distribution in Singapore for Martin Currie, a Legg Mason brand, who moved back to Edinburgh earlier in the year is stepping down from LM. Mike was managing an internal fund distribution role back in Scotland. Those who know relaxed and light-hearted Mr. Gibb well may be surprised to hear he is studying for an MBA.
Spy’s colleagues have been talking alternatives all week, which was highlighted by FSA’s Alts Forums in Singapore and Hong Kong. In Singapore, fund selectors and asset allocators showed significant enthusiasm to allocate to absolute return strategies – votes from 80% of attendees expected to increase their exposure. Singapore-based fund selectors had also turned decidedly bullish on emerging markets with 83% intending to boost their allocations to EM.
Speaking of alts getting traction, Spy overheard that Prestige Funds, which runs a direct lending fund, has recently received a large investment from a Saudi institutional investor, while a global asset manager is interested in a $50m committment.
Enthusiasm for emerging markets may be very heartening for Aberdeen Asset Management. The Scottish emerging markets experts have been publishing some snappy graphics about EM which Spy found illuminating and compelling. It highlights the following facts: 2.5 billion adults lack any form of financial services; annual EM domestic consumption is expected to rise to $30trn from $12trn by 2025; of the expected 1 billion new mobile phone connections by 2020, China and India will account for 45% of the global total and many more. You can see the stats here.
Pure hedge funds with their exorbitant fees and rather spotty performance have excelled in one particular area: making their owner/managers exceptionally wealthy. More than half of the 94 billionaires who have made their money in mutual funds, private equity or hedge funds have been through hedge funds businesses. The mutual funds business only created 16, including Abigail and Edward Johnson of Fidelity, Charles and Rupert Johnson of Franklin Templeton and David Booth of Dimensional. The data is shared within an insightful piece by Star Magnolia Capital in Hong Kong, entitled Farewell, My Hedge Fund. Spy thought this quote was particularly insightful: “For hedge funds, the entrance of large institutional investors gradually forced the industry to relinquish its formerly-prized risk-taking culture in an obsession toward risk management and higher Sharpe ratio at the expense of pursuing making money. Mediocre returns have followed and the industry is facing a day of reckoning.” Lesson of the day, says Spy, if you are going to buy a hedge fund, choose one with low institutional investment and high manager ownership.
Spy hears rumours that Deutsche Asset & Wealth is going to once again rebrand itself. Expect to see the Deutsche Asset Management brand come back to the fore as greater differentiation is made from the wealth management part of the business. Deutsche Bank has had a tough time of late and was described by the IMF as the world’s riskiest financial institution, with its giant asset base and lingering huge derivatives exposure.
In another rebranding change, Credit Agricole-Indosuez is apparently going to give more prominence to the Indosuez name. The wealth manager has roots going back to 1858 with the digging of the Suez Canal as the Compagnie du Canal de Suez. Mergers, acquisitions and global expansions have followed with healthy regularity ever since. 2016 has marked the creation of Indosuez Wealth Management. Spy understands that increasingly the references to CA will drop away as the brand differentiates itself from the Credit Agricole retail bank.
Until next week…
