News reaches Spy that Ben Cherrington, who has been running the wholesale distribution business of M&G in Asia, is stepping down from the company and taking a sabbatical. Ben had been scheduled to relocate to London having spent the last five years building M&G into a far better known brand in the Asian wholesale market with a wide range of partners. However, Spy understands he is taking some time out from the industry instead. William Tan, with a wealth of experience at Franklin Templeton and Capital Group, has already taken over Ben’s distribution role and Alex Jeffrey remains in charge of the entire M&G business in Asia as their growth plans continue to roll out. M&G’s North American Dividend Fund has had a good 12 months. The fund is up a healthy 14% in GBP terms.
What’s in a name, wonders Spy? The Hong Kong SFC publishes a list of firms that are granted type 9 asset management licenses each month. In May alone, a further 21 companies were added to the list. The companies, many of them small hedge funds or limited investment companies, usually have dull enough names that suit the conservative corporate environment of Hong Kong. However, the month of May threw up some gems. Exhibit 1: Optimus Prime Asset Management Company Limited. For those unlucky enough to have seen the truly dreadful movies, they may recognise Optimus Prime as a lead character in “Transformers”. Spy hopes OPAM’s investment performance reflects the films’ box office success and not their artistic achievements. With a touch more literary flair, Spy spotted Rivendell Partners Limited. Rivendell is the city of the glorious, successful and immortal elves in J.R.R Tolkien’s seminal fantasy, The Lord of the Rings. It is not hard to guess which one of those Spy would choose to manage his meagre funds.
The asset management industry constantly tells investors to buy unpopular, out-of-favour assets instead of the frothy top-of-the-market ones. But what about their own marketing departments? Spy did some research and discovered that during 2017, no fewer than 21 different presentations were made about emerging markets, across various ideas and asset classes, at Fund Selector Asia events. And yet, 2018 has not exactly been kind to EM with equities and fixed income suffering broadly. Some might say a little bubble has burst, to be honest. A survey published by the Institute of International Finance indicated that $12.3bn was pulled from EM in May 2018 alone and the flows into EM in the first five months of the year were only $46bn compared to $134bn in the comparable period a year ago. Asset management still has a tendency to promote what has done well, even if their portfolio managers know the out-of-favour investments are likely to do better in the following year. Just saying.
On Spy’s frequent trips through the Hong Kong airport, he regularly browses the Relay shop for the latest books on investing. They usually, without many exceptions, promise the same thing: They can teach you how to make a fortune, trading or investing, in 300 pages or less. Essentially they are get- rich-quick books. Spy dismisses most of these with the contempt they deserve. After all, if these traders were so successful they would probably not waste time writing books about it and instead spend time trading, presumably making more cash that a few book royalties. This week Spy read the perfect antidote to this nonsense and can’t recommend it enough. The book is called “What I Learned Losing a Million Dollars” by Jim Paul and Brendan Moynihan. It was published in the mid 90s and has been reissued by Columbia Business School. There are so many insightful truths in the book that it would be impossible to list them all but the one Spy loved, above all, was the following. The authors point out that nobody, well nobody sane anyway, would buy a book on brain surgery, read it over the weekend, and then on Monday morning grab a scalpel and start slicing craniums open. Yet, this is what the investment publishing industry would encourage of novice traders in the world’s most complex, sophisticated and downright confusing marketplaces of all. Every private banker in Asia should give the book to their clients and remind them why they should place a little trust in people who have spent years trying to get to grips with the markets. Investing is not learned over night and any short term trading success is almost certainly down to luck.
Spy’s photographers have spotted several new campaigns this week. Spy, took particular note of Pictet’s rather nostalgic tech campaign including an image of a mix-tape. Spy’s younger readers may want to read Nick Hornby’s “High Fidelity” to understand the emotional connection people of a certain generation had to these romance-inducing widgets:
Next up, Vanguard is on the trams promoting ETFs. There is a shocker!
Finally, CSOP has another campaign for ETFs in Hong Kong. Nobody can accuse the ETF industry of not making a big effort to win over consumers.
Until next week…