Spy’s jovial dining companion last night, was a veteran portfolio manager who has seen more cycles than a stage judge at the Tour de France. Over a robust Californian Zinfandel, he made the obvious, but oft forgotten, observation that the state of the economy is largely a confidence trick. When people are confident they spend and invest with the certainty of youth. When confidence has drained away, they hoard their pennies like drought-stricken rice farmers. All too human and all too obvious. His point was, that we are only a few confidence- boosting announcements on Brexit and the trade dispute away for the wall of money, languishing hopelessly in bank accounts, to come rushing back into the marketplace. Right on cue, Trump hints at a trade deal while and Johnson and Varadkar make purring noises after their cosy tête-à-tête. Perhaps Q4 of 2019 will not repeat 2018’s horrors after all? Spy is not exactly confident about this, but then that’s exactly my companion’s point, isn’t it?
News has reached Spy that David Agar has joined St James’ Place (SJP) in Singapore. Until recently, Agar was in charge of fund selection for Singapore-based wealth manager, AAM. AAM competes heavily with SJP in the so-called, expat advisory space, although both firms have been adding local advisers to their teams as they seek growth in the region. AAM is owned by Quilter, a FTSE 100 company, with more than £115bn ($143bn) in assets under management (AUM). Spy understands that AAM, led by recently appointed CEO, Eryk Lee, is in the process of hiring Agar’s replacement, although no announcement has been made.
Merian Global Investors, notes Spy, has pounced on an unconstrained multi-asset team at London-based boutique, Kestrel Investment Partners, adding $151m of AUM in the process. As part of an acquisition announced yesterday, the Kestrel Global Portfolio will transfer to Merian and be renamed as a Merian product in due course. The fund is headed by John Ricciardi, a highly experienced multi-asset investor, who spent six years at Alliance Bernstein as global head of asset allocation. Merian has hinted this may not be the last acquisition it makes.
Ah…solutions. One is not allowed to offers funds or wealth advice any longer. These days it has to be all about “solutions”. It was, therefore, no surprise to Spy to see another firm making a change in that direction, one might even say, hopping on that bandwagon. This week, Hong Kong wealth manager, London and Capital Asia, has rebranded itself LCA Solutions Limited. According to Eddie Chu, LCA’s CEO, the change is being made “to reflect our focus on providing the best solutions for our clients”. In a region with very few wealth taxes, Spy is convinced that what clients really want is to make lots of money. Now that really is a solution.
Spy has heard many claims about artificial intelligence (AI) in the last few years, often in breathless press releases promising the earth, but in reality with more smoke-and-mirrors than a cabaret hall. This week it seems, however, that venerable DBS Bank is using AI for a real, tangible benefit. DBS has introduced an AI app that helps screen potential wealth managers for its retail bank. Apparently the app has significantly improved the screening process and made DBS’s recruitment process far more effective. The bank calls the service Jim and it is basically a “chatbot” that eliminates weaker candidates and is successful because it has less bias than a human recruiter. Does this mean that an AI fund selector is around the corner, with fewer human biases?
Dude, do you remember, like, eh, when buying marijuana stocks was the cool thing? Spy strongly suspected many investment managers, investment bankers and analysts had all been smoking the pre-IPO product samples dished out so liberally. Those sky-high marijuana stocks have come back down to earth like a post-party downer and it is more than just a dry throat the investors will be feeling. Take Tilray: at its peak last September, the firm had a higher market cap ($28bn) than 50% of the companies in the S&P 500. It has since declined 93% to its lowest level since its first day of trading post-IPO. Current market cap is a measly $2bn. Is there a lesson here? Be deeply sceptical of the hype, especially around products that governments around the world don’t exactly love. Libra, Spy is also looking at you.
If you are a fund sales person hoping that 2020 is going to be less about fixed maturity products (FMPs) and more about active strategies, you had better hope that the trade war, Hong Kong unrest and Brexit get some resolution. Fast. Spy has already heard from numerous banks that they are gearing up planning for 2020 and a lot of that involves choosing an FMP partner and a timeframe to IPO. Active strategies remain a secondary thought for now, although one fund selector at a large global private bank told Spy that “any change in the geopolitical weather could release massive pent-up demand for active funds.” If for no other reason than FMPs are as dull as a Russian arthouse family drama, Spy hopes a touch of geopolitical sanity returns soon.
Outdoor campaigns have sprung back to life in Asia in the last few weeks. Spy’s photographers have been spotting asset managers on every street corner, some trains and trams and, of course, station concourses.
First up, Eastspring is pushing their monthly income solution on taxis in the Lion City.
Fidelity has been spotted in numerous places – including the Downtown MRT in Singapore with a shiny new brand campaign. But it was the back of the seats spots on the HK Airport Express that Spy rather fancied.
T. Rowe Price is in Raffles Place with a whopping great advert building its brand. It’s hard to miss this one.
Merian is back on the sides of trams in Hong Kong, highlighting its CoCos fund for income.
Until next week…
P.S. Wales looks to be ending the pool stages of the World Cup the top of Pool D. Spy is keeping the faith.