Posted inFSA Spy

The FSA Spy market buzz – 11 November 2016

Pimco hires; FPI finds a replacement; plaudits to Janus; Eastspring and Invesco; asset managers on Trump; thoughts on consolidation; Muzinich’s launch gets closer and much more.

In Hillary Clinton’s autobiography, she acknowledges the old Chinese curse, “May you live in interesting times.” She claims that it used to be a running joke in the family and she would ask Bill, “Well, are you having an interesting time yet?” While she and Bill may be headed for ‘retired times’, the rest of us are certainly “living in interesting times”. Spy, like so many other observers and sofa politicians is confused and conflicted over The Donald’s win on Wednesday. One senior Swiss female banker confessed to Spy, over a fine glass of Chianti, “I can’t stand the man. But I am glad he won.” That view may be more widespread than people wish to confess.

Spy hears news that Alice Lo, formerly of NNIP has moved across to join Michael Thompson and Pimco in Singapore. Pimco has been hunting for a retail sales specialist for a while and Spy’s hunch is that Alice has taken up this role. The competition in the Singapore retail asset management space has never been more intense and is only getting tougher. Spy has no news on Alice’s replacement at NNIP but will report back a soon as he does.

With Toby Simpson, sales director of Friends Provident International, leaving Singapore and heading down to Australia, FPI has been searching for a new sales head. Spy has learned that the role has now been filled. Kevin Stone joins FPI on Monday. Kevin used to work at AMP in Australia and is believed to have been an old colleague of newish FPI Singapore CEO, Andrew Waddell. FPI has been used by Aviva to expand the penetration of its Aviva Investors range of funds, especially its absolute return flagship, AIMS.

With so much concentration on the US election this week, Spy took a look at which US funds available for sale in HK have performed the best over the last six months. Take a bow Janus (soon to be Henderson) with their Opportunistic Alpha fund leading the pack, up 13.2% over the half year. Eastspring North American Value has also has achieved double-digit returns with 11.9% and Invesco joins that illustrious club with its Value Equity fund up 10.8%. Interestingly, not a single fund in the 83 listed for sale in HK by FE is negative over the last six months.

The asset management community has been swift to comment on their blogs on Trump’s unlikely and unpredicted win, notes Spy. Henderson Global Investors wrote, “Little did we realise that we should have been looking to ‘The Simpsons’ as our guide for political forecasting rather than the pollsters.” Blackrock meanwhile highlighted concerns over China relations saying, “Trump has said he may withdraw from or renegotiate trade deals as well as label China a ‘currency manipulator’. This raises the spectre of retaliatory protectionist moves by other nations.” Capital Group echoed this China concern, writing, “[Trump may] also kill the Trans-Pacific Partnership, a result that would hurt America’s prestige in the region. Finally, Trump has called for tougher rules on trade with China, which he says has taken advantage of US trade negotiators for years.” M&G was looking for upside and downside potential, observing, “Trump’s flagship policies to reduce taxation and infrastructure investment would seem likely to provide a significant stimulus to the US economy. This should favour domestic companies in more economically-sensitive sectors which may be bad news for the relative performance of the more defensive end of the US healthcare sector in particular i.e. the pharmaceutical companies.” Aberdeen mulled over the consequences of Trump sticking to his campaign rhetoric, arguing, “… if Mr Trump does not take the opportunity to tone down his campaign musings on the possible writing down of US overseas debt obligations, the risk premia on US assets could rise – particularly if combined with worries about political interference with the workings of the Fed.” BMO Asset Management, thinks, “Janet Yellen’s term will not likely be renewed once it expires in January 2018, but staggered terms of the Board of Governors prevents wholesale changes. We still expect a Fed hike in December.” But perhaps Henderson should have the final word, because it reflects views Spy has heard in less guarded conversations over the past few weeks, “And, quietly, many investors have asked themselves whether on some issues Trump may have a point. Few international observers will warm to the isolationist talk, but there is growing recognition that existing stimulatory policies are getting nowhere, while the increased tensions between the ‘haves’ and ‘have nots’ has become too great for even the most diehard capitalist to ignore.” Spy has to agree.

Spy has heard much talk about the challenging environment in wholesale fund distribution in Asia as the market consolidates and fewer players control the bulk of fund sales volume. DBS buying ANZ is only the most recent acquisition, of course. ING Private Bank, Wing Lung Bank, Barclays Wealth and number of others all make up an illustrious roster of names that have disappeared (or will do so) in the last few years. This has coincided with a plethora of asset managers who have entered the wholesale space: Wellington Management, T Rowe Price, M&G, PIMCO, Hermes Investment, Nordea, Jupiter, Capital Group, Pinebridge, Standard Life Investments, BNY Mellon IM, Principal GI and Lombard Odier IM to name but a few. And yet, there are reasons to be optimistic for the growth of the industry as a whole: new players are also being created and not just in Singapore and Hong Kong. Banks which previously played lip service to wealth management are building viable platforms across the region, new external asset managers and multi-family offices have been launched, start-up robo-advisers need funds and IFAs are moving up the value chain, all creating alternatives and competition to the consolidating behemoths. As a March research note written by Jeremy Amias, Standard Chartered’s global head of financial institutions, put it, “Asia’s asset management industry has momentum. It is growing at a rapid rate, far faster than the rest of the globe’s. Liberalisation, deepening capital markets and ageing populations all give reason to believe this will continue, making Asia a significant part of the global industry by 2025”. The report went on to say that Asia has only about 5% of global investment fund assets but their growth is “likely to outpace any other region’s.” Don’t believe the doomsters, says Spy, asset management has a bright future in Asia, distributor consolidation notwithstanding.

Earlier in the year Spy reported that Muzinich & Co was mulling coming to Asia. It seems that the New York-based fixed income asset manager will imminently open up its Singapore office, according to gossip Spy overheard while watching the election results in a Lan Kwai Fong bar. The firm may be NY-based, but the decision is not connected to Trump’s win (in fact, Clinton took New York state). The privately-owned firm has a range of fixed income funds, particularly corporate high yield. Keep a watch on FSA for further details.

Spy’s band of merry photographers have spotted some Aberdeen advertising on the MRT in Singapore reminding everyone that emerging markets are here to stay:


Until next week…

Part of the Mark Allen Group.