Spy was handed a non-alcoholic beer by the domestic Commander-in-Chief this week whilst she carefully hid the label. Spy dutifully drank the concoction and was none the wiser until he realised the usual buzz was gone. He felt like a mutual fund investor who invests in last year’s best performing fund only to find it then turns in a dog year. Disappointed with the performance and unhappy with the price indeed.
Spy hears from a very senior source at UBS Wealth Management that their clients have been aggressively buying hedge fund and alternative products in the last few months. Clients were deleveraging their portfolios all of last year and reducing gearing. Now, they are seeking leverage in the products themselves. Anyone for a double-your-money short fund? Apparently momentum and CTA products have renewed interest, as do active long/short funds.
The CFA Institute reports to Spy that Asia-Pacific continued to be the largest source of CFA candidates, accounting for 47% of total applicants in December. China had the second-largest number of exam-takers globally (9,502). In Asia-Pacific, Hong Kong was first with 2,110, followed by Singapore (1,591) and Korea (1,095). The number of candidates in Asia-Pacific who sat the exam grew by 11% to 24,482 in 2015. With so many people getting the designation, Spy wonders whether the CFA is the new MBA – i.e. not as much of a differentiator as the candidates think it is. Interestingly, a multinational private bank in Asia that Spy spoke to has struggled to persuade staff to take up public speaking courses, despite the evidence that competent public speaking skills typically raise an individual’s salary by about 10%, all other things being equal. Time for a “MPSA”, perhaps?
Spy wonders whether Amundi’s IPO investors are happy. The French asset management giant was floated at €45 per share last November. After a brief jump to €48, the shares have fallen steadily to €38.59 and are now down 14% from the float and 10% year-to-date. But not to worry, the staff insiders are OK. According to a press release before Christmas, about 40%, or 1,402, of Amundi’s staff took part in the concurrent reserve capital increase at the time of the float, buying €16.3m of discounted shares at €36 each. They are all still in the money.
Does disruptive technology usually pop up in investment strategies that are tightly defined? Spy thinks not; SPDR thinks so. State Street has launched a new ETF this week called “The SPDR FactSet Innovative Technology ETF” based on the eponymous index which itself launched in September last year. The index is limited to 85 stocks and restricted to those listed in the US. True innovation and disruption usually comes from left of field and is seldom sitting in neatly defined tick boxes.
ETFs, incidentally, are getting ever-more creative. In the US, you can buy products such as the PureFunds ISE Cyber Security ETF (HACK) or Restaurant ETF (BITE), according to a report from the recent Inside ETFs conference.
Spy reads in FSA’s sister publication International Adviser that GAM, the Swiss multi-asset manager, previously owned by Julius Baer and UBS, is increasing focus on Asia. GAM, the second largest absolute return manager in Europe behind Standard Life Investments, is expecting to add Singapore and Hong Kong dollar share classes to its range in 2016 as it ramps up Asian distribution efforts. Watch this space.
How silly is the rhetoric getting about China? Pretty silly thinks Spy. One Asia-based asset manager told Spy that in a recent presentation to Californian institutional investors, investment committee members were so spooked by the China slowdown that they were asking questions, with genuine concern, such as “Do you think the yuan is going to devalue by another 50% and will their equity markets fall another 20%, just as our newspapers say?” Spy is only too happy to allow for a black swan event in one’s thinking, but an implied fall of 60% in China seems outlandish.
Spy doesn’t mean to be critical but if you are advertising a private banking and premium wealth management service, it helps to be more than a currency and mortgage broker. Spy spotted Westpac in Hong Kong, one of the Aussie big four, advertising its private wealth services and was lured in. It turns out “multi-currency property finance, cash-backed loans, multi-currency term deposits and foreign exchange remittances” all got top billing alongside an undefined and distinctly unloved “investments” offering. Perhaps “premium wealth management” for Westpac is buying inflated-price condos overlooking Darling Harbour and hoping for the best?
Spy suggested in this column a few weeks ago that the Fed was probably already regretting its decision to raise rates in December. It is only January, but already the weasel words of indecision are coming. In its latest statement the Fed says it is “closely monitoring” global events lest they impact the US, a sharp change from December’s commentary. A March move in rates is likely off the table giving all those high yield bond funds some respite.
T Rowe Price is rumoured to have hired its Singapore private bank/wholesale salesperson, who is scheduled to join in March. Apparently the Hong Kong role is getting closer to being finalised, too. The blue and white ram is coming.
Spy’s spies have not seen much new outdoor advertising in the usual haunts. However, Amundi has painted some trams blue in Hong Kong this month.
Until next week…
