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The FSA Spy market buzz – 06 November 2020

Man Group hires; Change at GAM; CEO honesty; Ant disappointment; Natixis and H20; Political thematic; Dimensional’s fee cuts; US election and much more...

“If there is one thing that markets are truly brilliant at doing, it is coming up with stories to justify the state of play and keep people buying”, a CIO of a Hong Kong / Australian asset manager told Spy this week over a bottle of Seresin Sun & Moon Pinot Noir from Marlborough, New Zealand. For anyone amazed at the blistering rally in risk assets, look no further than Wall Street’s shift on dime from the “Blue Wave” is good story to the “Gridlock is great” narrative. “Never forget that Wall Street is first and foremost a sales machine,” he added, “and like any good marketer, it will find a way to keep selling its wares.” Rather cynically, Spy’s jovial  drinking companion said rather more prosaically, “Just BTFD.” If one is not familiar with the acronym, a 30 seconds search on Google will spare’s Spy’s blushes. Yes, just BTFD.

News reaches Spy that Man Group, often described as the world’s largest listed hedge fund firm, has appointed a new global head of marketing, including oversight of Asia. The firm has pinched Anji Kang-Stewart from Wellington Management. Anji will remain based in London in her new role.  Spy has no news on who is replacing Anji at Wellington. Man has been steadily changing the profile of its strategies over the last decade through acquisition and Spy understands that about half its portfolio is now long-only funds. The manager has had success in the last 12 months with its Man GLG Continental European Growth fund, which is up nearly 26%.

Spy understands that changes are taking place at GAM in Hong Kong. The firm is losing Francis Wong, Head of Intermediary Sales and also Kristy Wong its Client Associate Director. Spy is not aware of where Francis and Kristy are headed to, although he understands they will be staying in the industry. GAM has had success over the last year with its China Evolution Equity fund – it is up 35%.

It is amazing how outspoken people become once they are released from the straight jacket of corporate CEO-dom. This week, Martin Gilbert, the former Co-CEO of Standard Life Aberdeen went on record saying, “active managers need to do better or they don’t have a future.” Spy can’t imagine he would have been quite so blunt in his previous role. Former Goldman Sachs CEO Lloyd Blankfein told his numerous fans and followers he was looking forward to being more forthright when he stood down from the iconic bank. Spy reckons the entire finance industry could do with some honest home truths from time-to-time when these leaders are actually in power rather than waiting until they are safely on the side lines.

Spy reckons this week will be known as the Week of a Million Disappointments. No, Spy is not talking about the US Election. The cancelling of the Ant Financial IPO broke hearts across the region who were expecting some quick money. Spy can sympathise with the regulator’s alarm at the margin frenzy that took place with mom and pop investors and felt the need to step in before a potentially volatile calamity unfolded. This setback for Jack Ma is likely to prove temporary and Spy is convinced Ant will come back and IPO in about six months to a year’s time. By then it may not be quite so frenzied, but then again, pleasure denied is often pleasure enhanced.

The FT has reported that Natixis is throwing in the towel with its majority-stake owned subsidiary, H20, and has put its shares on the block. The bond manager that had all sorts of liquidity problems, has seen its assets drop from €30bn ($35.45bn) in January to €20bn now as investors have shunned the firm. Natixis, overall, continues to grow organically and through acquisition. The multi-boutique manager now has more than €1tn of AUM post its acquisition of Banque Postale Asset Management and healthy growth continues in other parts of its business.

If you are the sort of person who likes to think politically with everything you do, including investing, then Spy has the perfect fund options for you (No, really!). Reflection Asset Management has just launched an ETF named US Democratic Values. The fund invests in companies that donate at least 75% of the political contribution to Democratic causes. Its ticker is DEMZ. This utterly facile approach to investing is a counter to the equally facile, America Conservative Values ETF, managed by Ridgeline Research. Of all the ways to invest one’s hard-earned cash, Spy can’t think of anything more alien to him. No wonder the US is so utterly divided.

The fees just keep on getting thinner. This week it was Dimensional out with the razor blade again. The Austin, Texas headquartered firm with offices in Hong Kong and Singapore, slashed the fees on 33 of its funds by 15%. This is less than a year after cutting the fees on 77 of its funds which took place last December. The firm has also just registered three actively managed ETFs – US, International and Emerging Markets funds.  The firm currently has $527bn of assets under management and favours selling through financial advisors across the world.

At the time of writing, the US election remains undecided. For anyone thinking the delayed results are unusual, a quick reminder that the US has grand form in this regard. In the 1876 Hayes-Tilden race, the winner was not resolved until a few hours before Inauguration Day, which was 4 March back then (Hayes won). There were areas of the nation where state militias were called out to keep order as the controversy over who had won the election raged. Trump’s legal gambits are, after all, nothing new in US politics and seem to go with the territory. Hunter S. Thompson of ‘Fear and Loathing in Las Vegas’ fame, once wrote, “The brutal reality of politics would be probably intolerable without drugs.” It is hard not to agree with the Gonzo journalist this week. Spy’s favourite comment on democracy is that it resides in the counting, not the voting. Indeed.

Until next week…

Part of the Mark Allen Group.