Posted inFSA Spy

The FSA Spy market buzz – 27 Nov 15

Vanguard's loss is JP Morgan AM’s gain; Invesco out of luck; Old Normal at Morgan Stanley; BNP WM wants another fund selector; Morningstar and the SEC in the Philippines; Manila fund selector tastes; ads from NNIP, Fidelity, Blackrock, and much more.

“You know they only serve poor quality saké hot, don’t you?” Spy’s penchant for warm saké was making him look like a country bumpkin this week in Tokyo.

“They serve old and poor quality saké hot to mask the taste. And to keep the gaijin happy”, said my ridiculously cool, Yale-educated and shiny-shoed host at a large Japanese wealth manager.

Despite the technical recession Japan has just recorded, Tokyo felt as buoyant and crazy as ever with Ginza and Shinjuku bustling to the point of delirium. What are the investors buying at the moment, asks Spy? Mostly JGBs, of course, but the retail crowd got excited about Japan Post last month and helped Abe realise his dream of floating one of the world’s largest companies. And foreign investment? “Well, some Europe, US muni bonds and a little bit of global high yield. But we like local, we are still very patriotic!”

Vanguard’s head of marketing, Gloria Chung has left to join JP Morgan Asset Management in Hong Kong. Spy has had no word on who is replacing Gloria in the ETF hot seat. Spy understands that Gloria has taken Heidi Sutton’s old role at JPM: regional marketing chief.

In another marketing move, Invesco’s marketing team has lost Amy Luk. She has been replaced by Joey Yeung who comes comes across from Pyramis into the role of head of strategic marketing in Asia, ex-Japan.

Spy hears that BNP Paribas Wealth Management is currently looking for a new long-only fund selection person in Hong Kong to bolster their team. Stalwart, Aaron Cheung, is now concentrating exclusively on alternatives while Agnes Sng is still looking after traditional funds in Singapore. Spy also notes that BNP Investment Partners has pinched Mandy Lui from Schroders to boost private bank sales.

Spy raises an eyebrow with the news that Franklin Templeton is applying to launch two new Shariah-compliant funds (one equity, one bond) in Malaysia to add to its range there. Spy has noticed that Shariah funds have, over the past few years, gathered relatively few assets as investors tend to be more enthusiastic about returns than about the actual structure of the fund when it comes to signing on the dotted line. However, with the ringgit down about 29% since January 2014, perhaps local investors simply want any vehicle to get some hard currency exposure and if it ticks another box, all the better.

Spy loves optimists in a cloud of gloom. He notes the recent registration in Singapore of S.E.A Asset Management’s Asian Equity Discovery Fund. The S.E.A.A.M portfolio managers believe that “value has emerged in small and midcap Southeast Asian equities”, which would seem to be the understatement of the year. The MSCI Southeast Asian Small Cap Index is down 21% to the end of October over one year and has achieved a pathetic annualised (-)1.02% return. The managers boldly claim, “Southeast Asian equities should outperform and small and midcap stocks are the best way to participate in this regional growth theme”. Spy will watch with interest.

Hat tip to Morgan Stanley Wealth Management, which has put some effort into correcting the widely-held view that low Fed interest rates are unprecedented. In a worthwhile piece, MSWM CIO, Mike Wilson, is quoted as saying, ‘This isn’t the new normal. This is the old normal’, because between 1948 and 1961 the Fed was particularly accommodating and slashed rates to the bone to help the US out of what was four recessions in just thirteen years. As the saying goes, those who don’t know their history are doomed to repeat it. MSWM is encouraging investors to buy equity-like segments of the bond market such as high yield and preferred securities.

Spy’s colleagues report from Manila that fund selectors in the Philippines are bullish about Europe and Japan with 54% and 60% planning to increase their allocation to European and Japanese Equities respectively. Perhaps in line with local GDP growth of 6%, with the rest of the region stuttering, the Philippine allocators were the most optimistic of all Asian fund buyers FSA has surveyed this year. 73% said they will increase their Asian equity exposure over the next 12 months. Contrast that with the most recent Singapore survey, less than half of fund selectors were expecting to increase their Asian equity exposure.

And speaking of the Philippines, Spy wonders about the influence of a Morningstar rating, which is, after all, backward-looking. For a UCITS fund to be brought in and locally-wrapped, the local regulators say eligibility is through a four star rating or higher from…Morningstar. It used to be five stars, said Phillip Hagedorn, who wears two hats as the MD of Atram, a local asset manager, and the head of the Philippine Investment Funds Association. His group lobbied regulators to bring it down to four. 

Spy’s roving band of photographers have spotted some asset management marketing in Singapore.

NN Investment Partners is in the “Let’s Influence UBS” spot under One Raffles Quay:

Blackrock is pushing multi-asset, again:

And one would have to be dead to miss Fidelity’s branding push in the Lion City which is in the MRT, on buses and taxis. Global dividends are flavour of the month:


Until next week….

Part of the Mark Allen Group.