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The FSA Spy market buzz – 23 February 2018

Change at Aberdeen Standard; Promotion at CA Indosuez; Blackrock guns for arms; Standard Life Aberdeen slims; Axa’s investment arms; St James does discretionary; advertising and much more
The FSA Spy market buzz - 06 April 2018

Spy has ushered in the Year of the Dog with a little bit too much cheer and is already in great need of the “hair of the dog”. He is expecting bad canine puns in advertising and sales literature all year. Will we be told we are “barking mad” not to buy overpriced condos in Kazakhstan, or high yield for that matter? Will we be expected to reverse the saying that a poorly performing fund is a “dog of the year” fund? Will fund groups be involved in a “dog fight” for dominance? Surely, “every dog will have its day”. If you are groaning at Spy’s poor humour already, it is going to be a long year. One thing Spy will guarantee: investors will make the same mistakes this year as they did last – buying high and selling low, because, after all, “you can’t make an old dog learn new tricks.” Happy new year.

News has reached Spy that further changes have been made at Aberdeen Standard Investments. Virginia Devereux Wong, who had been in charge of retail business development in Asia at SLI, is stepping down from the business. She joins Katherine Cheung, who was head of marketing in Asia at SLI, in exiting the business. Spy understands that Katherine has returned to her consulting business, Crossgate Advisors but it is unknown whether Virginia is remaining within the industry. Standard Life’s China Equities A Share fund had a stellar time over the last 12 months – up 42%.

Spy reads in dispatches that Timothy Lo has become deputy CEO of CA Indosuez in North Asia. Previously, Timothy held the role of managing director of CIC which merged with CA Indosuez last year. Onward and upward!

Money talks and in this case, Spy sincerely hopes it talks loudly. In the wake of the awful Valentine’s Day school shooting in the US, Blackrock has put gun manufacturers on notice. The world’s largest asset manager was quoted by Reuters as saying that it “will speak with weapons manufacturers and distributors ‘to understand their response’ to the second-deadliest shooting at a public school in US history, putting pressure on companies such as Sturm Ruger & Company and American Outdoor Brands.” As in other facets of public corporate life such as pollution, labour practises, etc, Spy reckons asset managers have a role to play encouraging positive behaviour. Hats off to Blackrock for taking a stand. Interestingly, one side issue, which the firm freely acknowledges, is that if they wanted to divest themselves of all gun manufacturers, their ETFs which passively hold the stocks, would in reality prevent them from doing so. The unintended, darker side of investing in an index, perhaps?

If Spy’s memory is correct, gaming giant Nintendo started as a cardboard company in the 1880s and has evolved into one the world’s largest game console manufacturers. Nokia started as a pulp paper mill in the 1860s and is now one of the largest telco equipment providers. What has this to do with funds you ask? Spy noted that yesterday Standard Life Aberdeen Plc, announced the sale of its insurance company to Phoenix Holdings. In 1999, the business was a pure play insurer and a mere 19 years later it is now looking like a pure play asset manager. It is following in the footsteps of other corporate giants who have radically re-invented themselves.

Another week, another announcement on discretionary services. This time it comes from St James Place Wealth Management in Hong Kong. The FTSE 100 wealth manager is adding discretionary services through managed accounts. According to the firm, the new accounts will enable clients to access special risk-rated portfolios. With recent market volatility having shaken things up considerably, Spy would not be surprised to see discretionary services get a boost across the region.

Axa, the French insurance giant announced its full year results yesterday, notes Spy. It seems that Axa’s two main asset management arms, Axa Investment Managers and AB (Alliance Bernstein) both had a good year, according to the results. Axa IM now has €746bn in AUM with net inflows of €8bn last year. AB appears to have done even better, with net inflows of €12 billion. Spy was particularly intrigued to note the following about Axa IM: “Total revenues grew by 9% to €1.276, mainly driven by higher management fees benefiting from both higher average assets under management and higher asset management fee bps.” Yes, you read that correctly, “higher asset management fee bps”. So much for the asset manager narrative that “fees are under pressure”.  Or is this just another case of “French exceptionalism”?

It is merely 54 days into the year of 2018 and already, 60 new ETFs have come to market in the US alone. The ETF juggernaut rolls on. No one can accuse Vanguard of not being “in the moment”: one of their latest launches, which arrived on 15th February, is the “Vanguard US Minimum Volatility ETF”. Now, if only we had had that before February 5th…

Sometimes a picture is truly worth a thousand words, believes Spy. This graphic came across Spy’s desk and it was a case of never a truer word spoken. The only thing Spy would add, is that “private bankers” can sit alongside the word “investors”:



When Spy has had too many craft beers, uttering the words “Take me to Kowloon” becomes problematic, let alone any string of words longer than that. It occurred to Spy in a lucid moment that asset managers seem to be making their fund names longer and longer, making requests for them difficult even when sober. This tongue twister was spotted this week: “HSQF Shanghai-Hong Kong-Shenzhen Emerging Industry Selection Mixed Type Fund”.  HSQF is a joint venture between Hang Seng and China’s state-owned Qianhai Financial Holdings. One assumes, the fund becomes HSQF SHKSEISMTF for short.  Not exactly snappy, thinks Spy.

Spy noted that Mark Mobius is launching a new fund for emerging markets that has a strong ESG focus. The fund was first announced in India, which, coincidentally, is facing the fallout of one its worst ever banking scandals involving Punjab National Bank and an utter failure of governance. Spy thinks 81-year old Mobius’s timing is spot on  – as money flows into EM like never before, investors will be looking for strong governance tools for risk management, if nothing else.

Two quotes of the week from Spy: “When a person with experience meets a person with money, the person with experience will get the money and the person with the money will get some experience” ~ Leonard Lauder. And Spy’s favourite, “A study of economics will reveal that the best time to buy anything was last year.” ~ Marty Allen. Nailed it.

Spy’s photographers have spotted some new outdoor adverts from JP Morgan Asset Management in Hong Kong. Picking up the koi fish theme seen elsewhere, it is continuing to promote its China income range:



Until next week…


Part of the Mark Allen Group.