Dan Mannix, chief executive officer of RWC Partners, estimated his firm’s Asia assets under management at $500m-$1bn, excluding Australia.
He expects it to grow $1-$2bn over the next three years. “That’s a reasonable expectation, and it will be led by our emerging markets strategy.”
While Asia’s fund offerings have ample emerging market products, including those from well-resourced global firms such as Franklin Templeton and Fidelity, he believes RWC has the advantage of being small and nimble.
“Within the large organisations there are changes in the incumbent managers, such as managers reaching retirement. Those running large books prohibit them from looking at the more interesting parts of the market. Small managers can do it.
“[Additionally] the cost of establishing and maintaining a substantial EM team is very high. That’s why new entrants find it difficult to get into mainstream market allocation. We haven’t struggled with that because we’ve seen significant initial support.”
Emerging markets capability was launched two years ago and today it manages $4bn in assets, he said.
The firm’s 15-person EM investment team is based in Singapore and Miami, Florida. It is co-managed by John Malloy, who was hired from Everest Capital in 2015 to establish the emerging and frontier markets strategies.
Targeting private banks
In Asia, RWC’s targeted investor base is institutional investors and private bank wealth management. It is 43% owned by Schroders and has $13bn in AUM.
The firm is small compared to the global players established in Asia. But Mannix believes a boutique manager can get in front of Asia’s private banks, even though the dominant banks already have institutional relationships with large global asset managers.
In a previous role at JP Morgan Asset Management, Mannix was in charge of global private bank relationships, which he believes gives him insight into the service model that private banks prefer.
“It is challenging, but RWC in the last ten years has focused specifically on global private banks. You have to have a complete package, which includes the right products, infrastructure, people and fee structure. Private banks can’t work with a manager who doesn’t understand what the requirements are.”
As for retail distribution, Mannix said it’s an option under very specific conditions.
“We’re not going to be retail in lots of jurisdictions. We do white labelling. The local asset manager takes [RWC’s product] for their own product. We don’t have the infrastructure or skill set to do retail distribution, so we use partnerships in local markets.
“There is a clear opportunity in retail in Asia to partner with strong domestic brands, but we’re not looking to establish a retail brand.”
In Asia, Thailand is starting to attract the firm’s interest as the country continues to relax its regulations for domestic investors to invest in offshore assets. China is attractive in the long term, but the market is evolving too rapidly for a smaller manager like RWC, he said.
Mannix believes active managers and wealth managers are gravitating to Asia due to the generational change, which will affect the dynamics of investment.
“In Asia, wealth is passing from the first to second generation. Money will be coming out of property, and the families will be looking for income and capital preservation versus today’s pure growth.”
It’s early days for the firm’s global emerging markets fund, which was launched in February 2017. Below is performance since inception versus its benchmark, the MSCI Emerging Markets Index:
Source: FE. Fund NAV and index have been converted to US dollars
