Spy is celebrating his first drink of the year without hearing the boring stories about all the money his accomplices have made trading cryptocurrencies. The Korean government’s decision to try and ban crypto trading, that prompted a further multi digit % drop in bitcoin this week, has rather taken the wind out of their sails and the crowing has calmed down – a bit. Talk is now turning to “What can make money in 2018?” Here opinions are more varied than drunk football pundits. For what it is worth, the theme coming up again and again is emerging market equities. Trip to Vietnam, anyone?
Spy’s pocket notebook has been filled with people moving around this week. First up is the news that David Mitchell, formerly head of marketing at Fidelity in Singapore, has resurfaced. David has taken on the role of head of marketing for Asia-Pacific at newly- merged Aberdeen Standard Investments. Spy understands that David took up the position at the beginning of January. As the integration of the two investment firms gathers pace during 2018, Spy expects to see significant changes in the existing messaging. For ASI, India was the runaway hit last year, with the Standard Life Investments India Mid-Cap Fund up 52% over the previous year.
Hermes has added to its wholesale sales team based in Singapore. Spy has heard that Lin Chew, formerly of hedge fund manager Winton in Hong Kong, has joined the British asset manager, reporting to Jake Nilsson. Hermes, regarded as one of the world’s leading ethical investors, has been growing in the region in both the wholesale and institutional space. Hermes’ Global Emerging Market Fund is up more than 40% over the last year.
In another move, BNY Mellon has added to its Hong Kong wholesale distribution team. Spy understands that Phoebe Ao Leong, has joined the American multi-boutique giant. Phoebe was previously handling private bank distribution for Income Partners. Phoebe will be working alongside Nicolas Kopitsis, who is in charge of wholesale business development in the region. BNY had success with Europe last year – their small cap Euroland fund was up nearly 40%.
There are a great number of clichés uttered about the differences and similarities between Hong Kongers and their Singaporean counterparts. Spy decided to compare their preferences for funds. Morningstar produces a monthly list of most searched funds for each jurisdiction. Intriguingly, in December, not one fund was on both lists. Singapore and Hong Kong – same same but different, hah.
|1||First State China Growth Fund||Schroder Asian Growth Fund|
|2||AB SICAV I Low Volatility Equity Portfolio||Schroder IIS Fund Global Dividend Maximiser|
|3||BlackRock Global Funds – World Healthscience Fund||Allianz Income and Growth AM|
|4||AB SICAV I Emerging Markets Multi-Asset Portfolio||Schroder Asian Income|
|5||BlackRock Global Funds – China Fund||UOB United SGD Fund Class|
|6||Baring Hong Kong China Fund – Class||First State Bridge|
|7||BlackRock Global Funds – World Gold Fund||First State Dividend Advantage|
|8||JPMorgan Multi Income||Allianz US High Yield AM|
|9||Value Partners Classic Fund||United Asian High Yield Bond Fund Class|
|10||Value Partners Greater China High Yield Income Fund||First State Dividend Advantage|
Usually fund marketers like monikers such as “unloved” or “out of favour”. Not so Arrow Funds. Pulling no punches, they have just launched a new ETF in the US named “Dogs of the World”. The idea is that it will invest in the five worst performing countries over the previous year, on the expectation that “reversion to the mean” will have those countries, and therefore returns, bounce back. The fund is not shy about investing in frontier or emerging markets, either. This is hardly a new idea, notes Spy. For years Schroders has been running their Recovery Fund, the same sort of idea – and with excellent results, too. The UK-focused fund run by Nick Kirrage and Kevin Murphy has nearly doubled the performance of the FTSE All Share Index over a 10-year period.
In China, doing something that reflects central government and the Communist Party preferences is a sure way to win hearts. In the debt world, issuing One Belt, One Road bonds are all the rage. The Hong Kong government is not immune to this and welcomed the first issue by China Development Bank of an OBOR bond in the city. The only snag is that the $350m issue seems to be nothing more than a regular debt issue by the bank, something they have done 29 times before hand. The 5-year duration and size hardly qualify for any major infrastructure development. The full, amusing story is here on David Webb’s Webb Site.. Spy’s thoughts: Just like green bonds – never forget that debt with a fancy name and theme, is still just debt.
Is 2018 the year of thematic specialty funds? Spy certainly thinks a number of ideas will be packaged up. AI, variations of green, ageing populations etc. For those of a more spiritual bent, James Investment Research, an investment manager, has launched a fund that will invest in a “biblically responsible fashion”. Spy’s biblical knowledge is rather dusty having been drilled into him more than half a century ago – but he vaguely recalls that coveting thy neighbour’s ass is off limits and therefore the fund is unlikely to invest in Hong Kong’s favourite pastime of horse racing.
Bill Gross, Janus Henderson’s outspoken bond guru, made headlines this week with his comments that both bonds and men are in a bear market. With men having to hang their heads in shame over past sexist behaviour, Bill is wondering aloud whether bonds will be doing the same. Although he is a tad bearish, Bill still thinks money can be made in bonds and Spy will add that although men may be in a bear market, most women Spy has spoken to still think there is room for the odd bloke around, too.
As the world gears up for a change of behaviour from central banks as they ease up on QE, Spy adds a word of caution from Daniel Kahneman, the Nobel Prize winning economist and behavioural specialist. “A limitation of the mind is its imperfect ability to reconstruct past states of knowledge. Once you adopt a new view of the world, you immediately lose much of your ability to recall what you used to believe.” Investors, portfolio managers and fund sales people may do well to heed this sage insight.
Spy’s team of photographers have been roaming the streets looking for new advertising from the industry and found them flying by on buses. First up, Value Partners are promising some “double happiness” through the “union of value and income” with their Classic Fund:
AB is also out in the market place promoting Global High Yield:
Until next week…