Your humble Spy was with an investment councillor from a prominent Swiss bank this week. The discussion, over six pints of Little Creatures Pale Ale, rapidly drifted over to the question of what are their clients actually buying? “A bit of this, a bit of that, not too much”, was the dull answer. Spy, in his rather inebriated state, posed what he thought was the obvious counter question, “Why are the banks hiring so many bankers in that case?” He: “When I said they are not buying, I meant, mutual funds.” Apparently, they are buying other things…a lot of structured products at the moment…
News reaches Spy that Virginia Devereux Wong, who was formerly in charge of wholesale distribution at Standard Life Investments, has resurfaced. Virginia has joined HSBC Private Bank in Hong Kong as a managing director. Spy has read several reports this week that suggests that private banks are hiring as fast as they can and paying hefty privileges for doing so. Former colleagues at SLI and Aberdeen, who have had to endure the typical headaches of a large merger, may look with a tiny bit of envy in Virginia’s direction, muses Spy.
Meanwhile, in Singapore, Lombard Odier has hired Sen Sui, who was formerly head of wealth management for CA Indosuez. Sen, a veteran of the industry, joins as managing director as Lombard Odier expands in the region. The Swiss private bank and wealth manager has had success in the region with its partnership platform approach but also manages wealth directly for high net worth clients.
Spy loves a great quote as much as the next man. Few have uttered as many quotable quotes as Warren Buffet in his long and illustrious career. His most famous maxim, “Be fearful when others are greedy and greedy when others are fearful” sprung to mind as emerging markets take a good kicking in every direction. Spy looked at the worst performing funds over the last six months that are available in Hong Kong in the EM equity space, not to gloat, but, rather, as one commentator put it “to find out what is currently on sale.”
|Fund||Currency||6 Month %|
|Fidelity Emerging Europe Middle East & Africa||USD||-26.1|
|NB Emerging Markets Equity||AUD||-23.1|
|JGF-Jupiter Global Emerging Markets Equity Unconstrained||USD||-21.3|
|JPM Emerging Europe Middle East & Africa Equity||USD||-20.4|
Cold hard “Buffetian” logic says it is from these funds above (or similar) that investors should be looking to buy the dip. Spy strongly suspects that most Asian wealth managers will do nothing of the sort. Well, perhaps not all. The CEO of Singapore’s sovereign wealth fund, GIC, Lim Chow Kiat, said he saw this as a “buying opportunity” describing the rout as “idiosyncratic not systemic”. But, then again, GIC actually thinks and acts long-term – not for a mere three months, which is all too common in the wholesale space…
Do you remember when ETFs’ usual stated aim was to track an index as closely as possible? A key marketing and investment message was simple: “We will give you returns that are as close as possible to the performance of your chosen benchmark.” Times they are a changing. Spy came across this little snippet during a Google search this week.
It seems ETFs providers are learning an old active asset management trick. Choose one particular index to benchmark and then build a portfolio that looks rather dissimilar in an effort “to beat that benchmark”.
Hong Kong is home to many records. Densest city. Most expensive property market. Largest horse racing gambling turnover in the world. This week, according to Wealth-X, it added another one: The city with the highest number of UHNWI, overtaking its long standing American rival, New York. To make the list one needs a gentle, and rather useful, $30m in investible assets. With the average salary in HK coming in at around $2000 (HK$15,897) per month, according to Trading Economics, it is no wonder people are moaning about the inequality in the Fragrant Harbour.
By now, most people are aware that when a Nigerian banker sends you an email asking you to take a multi-million dollar deposit from a “lost bank account”, one deletes it – faster than closing the Facebook page when the boss unexpectedly walks past. Spy can only imagine that people still fall for more plausible sounding, but nonetheless ridiculous, investment schemes. This week, like clockwork, Spy received an unsolicited invitation from a supposedly “Swiss regulated” entity, promising me a “guaranteed 12% return annually”, from a “structured fixed income loan note”. Apparently this no-name brand investment company “specialises in providing exclusive solutions which focus on both capital appreciation and preservation”. All breathless stuff. I think PT Barnam said it best, “There is a sucker born every minute.” (Note to the EU: GDPR has done absolutely nothing to stop this sort of nonsense so far and just added to the cost of doing legitimate business…)
Spy is not entirely sure where his invitation was, but it seems to have been lost in the post! Allianz Global Investors was clearly entertaining in Hong Kong this week, however, Spy was not among the illustrious guests. Tut tut.
It must be September because the asset management industry has geared up its advertising. Spy has hardly been able to move in Hong Kong of late without being driven over by a tram, taxi or bus without an advert plastered down the side offering to make him richer while he recovers in hospital.
First up, Axa Investment Management is on the sides of taxis promoting high yield opportunities:
Jupiter is back on the trams with its “Active” campaign joyfully running through fields of gold:
Finally, Manulife Asset Management has been pushing three funds and it is finance and China all the way: Bank Opportunities Strategy, Dragon Growth Fund and Greater Bay Area Growth & Income Fund.
Until next week…