Spy is beginning to ask the unthinkable. Is this time different? Since the financial crisis of 2008, nearly a decade of global market expansion has taken place. Volatility is low, equity markets only ever seem to go up and all around the world, it seems calm. As if to confirm our golden decade, 6 of the 21 best vintages of Bordeaux in the last 50 years have come in the last 8 years alone. Not so fast, says Spy. Shakespeare, Sun Tzu and Confucius are still relevant because, in the long run, people never change. Spy’s recommendation: enjoy a glass of 2014 Pomerol and take a few profits. You may be pleased when you see that black swan flying past.
Spy has discovered where Yi Xie, formerly of BMO Asset Management gas gone to: Haitong Asset Management. Yi is remaining in a sales role at the Chinese asset manager. Haitong’s suite of funds are largely Asia focused. Haitong’s Middle Kingdom Fund, is up 28% year to date, hardly a middling outcome, thinks Spy.
Schroders seems to have shrugged off Brexit and delivered a rather stellar performance in the first half of 2017. AUM has reached a record high of £418.2bn ($547bn) while pre-tax profits have jumped a whopping 23% to £361.5m. The British asset manager has increased its dividend by 17% to 34p. The shares closed near a record high yesterday at £25.16, which gives it a 36% return for the year. Out of 71 funds registered for sale in Hong Kong, Schroders only has six that are in negative territory for the year. Not bad, says Spy.
How often does UOB Wealth change its core fund providers for its retail wealth proposition? Not often, muses Spy. Spy has been watching its list of providers for years and change has come slower than paint drying. Despite the fact that Singapore now has nearly 40 authorised fund providers, UOB still retains less than 20 manager partners. A careful look reveals that the list has actually shrunk to 15 from 19 in the last few years as Man, Permal, DB Platinum and Pioneer have disappeared from their list of available funds. That means less than half of Singapore’s fully-authorised players have managed to get listings with one of Sing’s largest retail distributors. For the record, readers should not confuse the retail portion with UOB’s private or affluent banking, which has far more dynamic manager selection and includes a much wider range of providers.
Bigger is better, right? In wealth and asset management, the mantra that we need ever more AUM is almost dogma. And, yet, the heretics are often proven right. What if too much AUM was a bad thing? It is now fairly well documented that many strategies need to get capped or they simply can’t deliver on their mandate, small caps being an obvious example. Therefore, it was refreshing for Spy to come across the simple ambition of J O Hambro Capital Management, stated plainly on its website: “Aiming to be the best, not the biggest.” JOHCM has 15 funds listed in FE’s Trustnet with 13 of them have at least a 5-year track record. Those 13 funds have an average return of 100.56% over 5 years and a minimum return of 65%. Pretty impressive indeed, thinks Spy.
It is now becoming well documented that Europe is emerging from its doldrums. In fact, Spy has spotted more enthusiasm for the Old Continent than he can remember since the birth of the euro. It is now five years since Mario Draghi, the ECB Chairman, said he would do “whatever it takes”. Well, what has it taken? 4 trillion euros it would seem. Writing on M&G’s Bond Vigilantes blog, Stefan Isaacs points out that there are some members of the “Governing Council who worry about the negative consequences of an ever-expanding balance sheet, the implications for the banking system, the Eurozone’s ‘addiction’ to debt and consequently the ECB’s ability to exit its ultra-loose stance”. It is very easy to expand a central bank balance sheet; much, much harder to shrink it, imagines Spy.
Central Banks have managed to manipulate bond and equity markets to their liking and tamed the volatility beast to almost boring stagnation. However, according to David Kohl, chief currency strategist at Julius Baer, there is one market that refuses to play ball and obediently listen to its overlords: the currency market. He laments the fact that the dovish stance of the ECB on rates versus the more hawkish view of the US Fed has not constrained a rise of the euro. Spy thinks having a lunatic in the White House may just have something to do with it…
It’s the summer. For the 18th year in a row, J.P. Morgan Private Bank has recommended several books for its clients to read, based on submissions from its own staff. The list came out last month and, as always, has interesting choices. Subjects include climate change, an African female president, personal growth and others. Spy has managed to read one on the list: “Rethink: The Surprising History of Ideas” by Stephen Poole. Hat tip to JPM PB, because the book is a cracker. It sparkles with great insights into technology, physics, philosophy, biology and much more. Poole does an exemplary job of reminding the reader that many ideas that seem novel have much older roots. Well worth picking up on your next plane trip.
In July 2016, Spy reported that the new Credit Suisse Asset Management had quietly amassed a rather significant bulk of assets since the bank sold the old CSAM to Aberdeen in 2008. The figure stood at $314bn. Today, CSAM has announced another jump in assets to $366bn. It goes to show that captive distribution is useful… Credit Suisse also announced today a healthy jump in profit from its Asian wealth management business – up 67% to 149 million Swiss francs ($154m), far outpacing the 14% growth in profit from the whole group. First half net new inflows for the global wealth management business was CHF 23bn. All seems well at Switzerland’s second largest bank, notes Spy.
Much ink has been spilled covering the fact that Jeff Bezos, albeit briefly, overtook Bill Gates to be the world’s wealthiest man yesterday. Whilst this may get journalists, investment analysts and anti-capitalist anarchists, excited, Spy is fairly convinced the one man who wouldn’t care a jot is Bill himself. For a man more interested in saving the world from polio, avoiding climate change, alleviating extreme poverty and who has publicly vowed to give away his wealth, such juvenile list-keeping must seem awfully insignificant thinks Spy.
Spy’s photographers have seen HSBC Global Asset Management trying to unleash our dreams. Spy is not sure that butterflies are his particular dream but the thought is admirable enough. One could do worse than buying HSBC GAM’s China Momentum Fund – up 50% over the last year. That seems pretty dreamy.
Until next week…
