Posted inFSA Spy

The FSA Spy market buzz – 23 June 2017

Pinebridge hires; Amundi merges; Shariah robots; Big spending asset managers; UBS likes millennials; Research reading; Big words for dull people; Ignorance in marketing and much more.

It rained and it rained and it rained. Spy told himself that never in all his life, and he is goodness knows how old – decades – never had he seen so much rain. Days and days and days. With apologies to A.A. Milne, this is how it is feeling in Hong Kong this week. At the time of writing, Spy’s stock of craft beer is running alarmingly low. He is left with, what can only be described as the worst idea of all time, a dubious beverage called “Seedlip”; a misguided gift from a friend. According to their blurb, it is a non-alcoholic, distilled beverage “that solves the problem of what to drink when you are not drinking”. Good golly is this what the world is coming to? Spy has had enough of synthetic derivative ETFs, synthetic CoCos, synthetic tradeable certificates and other such financial nonsense. Surely the beverage world can still make a drink, a drink!? If the rain continues like this, Spy knows what he will be drinking…water. 

News has reached Spy that Lisa Wang, formerly of State Street Global Advisors, has joined Pinebridge Investments in Hong Kong as head of marketing and communications. Pinebridge has largely focused on institutional clients in Asia up until now. Spy understands that Lisa’s arrival heralds a greater focus on wholesale markets too. Pinebridge is having a good year. Every single fund it has registered in Hong Kong is positive for the year. The top performer is PineBridge Global Emerging Markets Focus Equity, which is up nearly 28% over the last 12 months.

French giant Amundi has announced that its acquisition of Pioneer Investments will complete on the 3rd of July, as it has now received all the regulatory approvals around the world for the deal. Subsequent to the merger, notes Spy, Amundi has affirmed new regional heads. The North Asia head will be Xiaofeng Zhong, meanwhile Jack Lin will head South-East Asia. Giordano Lombardo, Group CEO and CIO of Pioneer Investments is apparently leaving the firm. Amundi has more than €1trn under management.

The robots are coming! Whilst Spy remains a sceptic on pure robo-advice, he will admit that huge energy (and money) is pouring in to the development of the sector. The latest robo to say “Hello, world” is ‘Algebra’ and it comes from Malaysia. Algebra is claiming to be Asia’s first shariah-compliant robo-adviser, too. The new service, developed by Farringdon Group, will launch on the 10th of July. Its shariah investment strategy is approved by well-known shariah scholar Datuk Dr Daud Bakar of Amanie Advisors. Stuart Yeomans, the CEO of Farringdon, believes the TER of using Algebra will be less than 1%.

“Hey big spender, spend a little time with me!” …admittedly Spy is never going to be able to karaoke that song like Shirley Bassey, but it seems some asset managers may have the legitimate claim in Hong Kong. According to a monitoring service by media agency, Fundamental Media, the table below lists the top ten marketing spenders in asset management, by channel, in Hong Kong during the month of May. The top direct advertiser was Manulife Asset Management, Hermes Investment Management topped institutional and Schroders was top of the wholesale channel. Spy was not surprised to see China Asset Management, the HK subsidiary of China’s largest asset manager, in the top 10 in every category.



Those pesky millennials; they seem to be everywhere. Demographics, hey – you just can’t beat it. UBS has been thinking about them, and more specifically about their wealth. Well, it turns out the quinoa-loving, yoga-practising, selfie-snapping, smartphone-obsessing generation has got a whole pile of money. And where is the largest pile? Asia of course! Citing some Deloitte data, UBS claims that by “2020, the total net worth of global millennials is expected to grow to $19–24trn”.  UBS expects that “460 billionaires will hand over $2.1trn [to the millennials in] the next two decades, a sum equal to India’s entire gross domestic product in 2015.” If the estimates turn out to be true, and Spy fully believes it, Asia’s millennials will have nearly 30% of that wealth (If your CEO needs a reminder of why you are building a seemingly extortionate-costing asset or wealth management business in Asia, perhaps send him or her that chart).



Spy knows more than a few advisers, bankers and wealth managers who suffer floccinaucinihilipilification (just look it up, you will want to use it more often in your conversation) when it comes to actively-managed funds. They have drunk the ETF cool-aid, and, well, suffer from the aforementioned syndrome. When one of these bores collars you, remind the good fellow that in the last year, the worst performing fund in Hong Kong that Spy could find was the expectedly volatile, Investec Global Gold C Gr which has dropped about 15%. Compare that with these ETF shockers which, although not actually registered in HK, can easily be bought by any decent broker: Direxion Daily S&P Biotech Bear 3X ETF down 83% or the truly dire ProShares Ultra VIX Short-Term Futures down 96.75%. Now repeat slowly after me…“selecting an ETF, is still an active decision”…

Thought of the week. About 40,000 sell-side research reports are produced every week by the world’s top 15 global investment banks, of which less than 1 percent are actually read by investors, according to a report written earlier this year by Benjamin Quinlan, CEO of Hong Kong-based Quinlan & Associates. Spy is not surprised. Most of them are dull as ditch water and notoriously biased. Still, MiFiD II rules are going to have a big impact on this, so watch this space.

The next time you are trying to market something, (a fund, a shoe, a stock, a cup of tea – anything), remember how ill-informed, ignorant or just plain dumb some consumers are, reckons Spy. In an article this week published by the Washington Post, it is claimed that 7% or 16.4 million American adults think chocolate milk comes from brown cows. Whilst it is easy to knock our Yankee friends, Spy has encountered more than a few consumers in Asia who think paying 5% for a fund up front is a good idea…You say “tomayto”, I say “tomarto”.

Until next week…

Part of the Mark Allen Group.