Spy has had a veritable smorgasbord of scary choices for Halloween: protestors in Hong Kong, Chicago PMI numbers, Chinese trade negotiator pronouncements and so many more. The clincher, however, was Spy’s guest last night, an affable New Yorker, who insisted on drinking something called Dr McGillicuddy’s Cherry Liqueur when Spy was offering him a Burn Cottage Vineyard Pinot Noir from Otago in New Zealand! Brains don’t account for taste as Spy’s companion is one of the smartest people in the industry. What was keeping him up at night? “Easy money used to be used to fight recessions” he said. “Now it is the default policy. This will end tears.” Cherry liqueur notwithstanding, Spy is hard pressed to disagree.
One can tell something about a company from the way it describes a new job, believes Spy. Spy was therefore happy to see that Newton, a BNY Mellon IM subsidiary in the UK, has chosen the title, head of equity opportunities, for the new role given to Ilga Haubelt who joins the firm next Monday. Ilga will head a team of ten people and manage Newton’s active equity strategies. Equity is always about opportunity in Spy’s mind and BNY is nailing its colours to the mast with this decision. BNY has had success in the last year with its Asian Equity Fund, up 20%, it’s PMs clearly finding some decent opportunities in our region.
Ooh-la-la. Amundi, has just announced pretty stunning results for the quarter ending in September. Europe’s biggest money manager had net inflows of €42,7bn, marking a record quarter for the firm. AUM is now more than €1,6tn at the French giant. Pretty much the only weak spot in the results was China, where its JV shed assets after a period of rapid growth. According to their announcement, “Third-party distributors showed a sharp rebound in activity with inflows of +€3.4bn (vs. -€0.7bn in Q2 2019), especially in Europe and Asia.” ETFs, notes Spy, now account for €122bn of Amundi’s AUM.
The final week of October always marks the anniversary of the Great Crash. 2019 marks the 90th anniversary of that devastating event and Aberdeen Standard did not let it pass unnoticed. A Thinking Aloud blog post written by head of global strategy Andrew Milligan, is a cracker of an article reminding anyone who would care to listen, that it is seldom wise to think “this time is different”. Andrew points out that it was debt that caused and exacerbated the crash first time around and the world is currently swimming in debt with the added spice of trade protectionism. In 1929, US economist Irving Fisher felt confident enough to say, ‘Stock prices have reached what looks like a permanently high plateau’. They had not, points out Andrew. Food for thought after eleven years of bull market, thinks Spy.
Just when Spy thought the hyperbole around ETF strategies could not get any more breathless, along comes a fund to exceed the expectations of even the most excited marketeer. In October, the Merlyn.AI Bull-Rider Bear-Fighter ETF, with the ticker WIZ (Geddit?!), was launched with a nod to every possible passing computing fad. Apparently the fund uses “genetic algorithms”, “fuzzy logic” and “adaptive tuning” to wickedly ride the upside momentum and magically prevent the downside. The fellow who launched the fund, ‘chief science officer’ Scott Juds, has been using “signal processing” since 1992 to refine his automated approach to investing. Spy wishes the new fund all the luck in the world but confesses to a certain scepticism over the whole enterprise – genetic algorithms notwithstanding.
In this competitive world an MBA, a CFA, a CAIA, even a PhD, may not be enough to stand out in the ladder-climbing jamboree that is the corporate asset management industry. If you are one of those people who likes to add letters to your name, like some people add ties to their wardrobe, Spy has good news for you. The CFA Institute now offers a certificate in ESG Investing. The UN PRI is supporting the initiative, of course. “CFA UK’s purpose is to make sure that investment professionals are technically and ethically competent to serve their clients well,” said Will Goodhart, the CEO of CFA UK, when the certificate was initially announced earlier this year. Spy was convinced that being ethical was already part of the CFA charter and most government exams. But in an industry awash with scandal, perhaps a little reminder won’t go amiss.
If you are a fund buyer who has had to sit through dozens of China equity presentations where the PM dutifully espouses his enthusiasm for Alibaba, Tencent or JD.com, rejoice for there may well be another stock example to choose from. This week, marketplace brand Pinduoduo announced a record quarter of $1bn in revenue and a user base of 366 million. This pushed its Nasdaq-listed market cap to $46bn on Thursday, above JD.com’s $45bn. The Chinese company, which has a reputation for targeting less well-off consumers with bulk buys of products, of sometimes dubiously quality, has nonetheless proven pretty popular. This is a firm that was founded just four years ago. It is hard to see a slowdown in China in their numbers.
It is going to be long. It is going to be monotonous. It is going to be rancorous. Sadly, it is going to be unavoidable. Yes, Spy is referring to the upcoming US election campaign. Only Brexit, in all its glorious tedium, has provided anything like the hot air that the 4-year US electoral cycle provides. Mark Mobius, of Mobius Capital Partners, never short of opinions, fired an early arrow this week, “I’ve said that if Trump is not re-elected, the market would go down. A 20% or 25% drop is probably possible.” Trump would no doubt agree.
Apple announced its results this week, confirming ongoing stock buybacks. Apple has bought back $283bn in stock over the past six years, which is greater than the market cap of 487 companies in the S&P 500. The company has truly been a money machine in the last ten years.
Spy’s photographers have spotted a new campaign by Amundi in Singapore focusing on disruptive investment. Based on their results listed above, Amundi is doing a fair bit of disrupting itself.
Until next week…
P.S. Spy, sadly, had to finally see Wales defeated in the Rugby World Cup to the South African Springboks. For what it is worth, he expects England to lift the trophy on Sunday.
