Spy found himself among the hipsters in Mong Kok this week ordering a bottle of Island 1842 Imperial IPA. In a petty snub to AB InBev’s thirst-inducing $106bn takeover of SAB Miller, spy raised his glass of hoppy, complex and joy-encouraging 8% craft beer and toasted the little guys. In a world, where “bigger is better” and “everyone needs scale”, Spy cheers for small companies and startups who battle the giants and still win on taste, style and, on occasion, performance.
Spy sees no let up in the push for liquid alternatives and notes that Lombard Odier IM is joining a long list of players in making a push in this space. LOIM added a new launch earlier this month with a global macro long/short fund to add to their existing US long/short strategy. Spy wonders whether investors will discover that liquidity in alts might be a bit like absolute return. Early AR investors seemed to think that it promised perpetual positive returns and were in for a surprise; so too, with liquid alts? Will all the liquidity be around when the markets take a hit? LOIM is claiming weekly liquidity for the new macro strategy, which is not exactly a flowing tap. Caveat emptor.
Is Man Group rising from the ashes, wonders Spy? Once upon time, Man was an active wholesale player in Asia, even holding a retail license in ever-so-demanding Singapore. However, as AHL failed to deliver during the financial crisis, the alternatives manager shrunk its operations, closed its Singapore doors, handed back its retail license and meekly abandoned its regular Bloomberg advertising. Spy spots Man’s performance picking up. Profits soared 89% in the first half to $280m, net assets flows in Q3 totalled $1.4bn and they have hired a new MD in Asia, Hersh Ghandi. A case of all good things come to those who wait? Spy will watch.
Spy hears private banks moaning regularly about how hard it is acquire new clients in Asia. Perhaps, they could start with a little simplicity? Spy came across J Safra Sarasin’s T&C’s to open an account in Singapore and Hong Kong. Clients are expected to wade through 64 pages of small print in Singapore and a whopping 84 pages in Hong Kong before than can deposit a single dollar. No doubt they will blame the regulators, but Spy thinks the industry has only itself to blame for being too complex.
Google can be a cruel mistress, thinks Spy. A regular reader sent in a screen shot of a recent BlackRock search in Google and was surprised to discover that the search giant seems to think BlackRock is rather scary. Similar searches with Schroders, Pimco and Fidelity were far more benign.
With emerging markets more out of favour than the England national rugby coach or a VW emissions engineer (take your pick), it is always a pleasure to find a contrarian story which illustrates the danger of groupthink. M&G’s witty and insightful Bond Vigilantes highlighted in a piece this week that Russian hard currency corporate bond spreads have tightened by more than 30% year-to-date. But you probably couldn’t have sold that paper to an Asian-based investor for all the wheat in Rostov.
Spy has identified more than 200 publicly-traded asset management firms around the world whose primary business is investment management, many of which are trading below or around the mid-point of their 52-week trading range. One firm stood out, though: specialist Aussie hedge funds manager, Magellan, currently trading near its all-time high. It is up 28% this year and 80% over last year.
Magellan has only a few funds and some of them are up 20% or more, so it’s not surprising they are seeing the love. Hat tip to Jupiter and Henderson. Their shares also continue to trade well reflecting good flows this year. Pity the Invesco and Franklin Templeton execs given share options in January. Their shares are down 19% and 31.7% respectively YTD.
The Spy’s prediction of no Fed rate rise this year is finally being agreed by the markets and the indices are loving it. The Dow Jones is up nearly 1,200 points in only 14 trading days and is now up 8.8% for the year. Speaking of QE, don’t forget Japan. Morningstar reports that strategic-beta ETP assets in Japan soared 318% for the year to 30 June, the biggest growth globally – while Asia’s strategic beta ETP assets rose 103% to $6.9bn.
QE to infinity.
Spy’s snappers have found little new asset management advertising this week. However, Schroders and their dragon have been spotted on busses in HK.
And Natixis has been covering the walls under Ocean Financial Centre in Singapore for a while.