“Diplomacy is the art of telling someone to go to hell in such a way they look forward to the trip,” goes an old saying. Spy thinks the current crop of global diplomats have got themselves a new handbook and niceties don’t feature much. Not since the 1980s can Spy remember such rancorous global relations. This week’s China / USA Summit in Alaska has already got off to a distinctly abrasive start with name calling before the first coffees were even served. For those of us in Asia hoping for smoother US / Chinese relations during Biden’s term, we may all have just had a dose of reality and realpolitik, too. Spy thinks he needs a drink, not just a coffee.
Spy has been keeping his eye on people jumping up the corporate ranks. This week he has spotted two industry colleagues who have been promoted. The first comes from Aberdeen Standard Investments in Singapore. Natalie Tan has been promoted from head of wholesale distribution, Singapore to the far wider remit of head of wholesale, Southeast Asia. Natalie has been with Aberdeen Standard since 2015, starting off as a business development manager. She has also held roles at Columbia Threadneedle and Invesco. Aberdeen Standard has had success in the last twelve months with its World Resources Equity fund, which is up an impressive 101%.
Over at RBC Wealth Management in Singapore, Shanice Lim, who has been with the Canadian firm since 2018, has been promoted to head of global manager research (funds), Asia. Shanice was previously director, funds and private equity in Asia, and has held roles at Janus Henderson, HSBC and Lion Global Investors. RBC, a division of The Royal Bank of Canada, manages more than C$850bn worldwide.
If there is one thing Spy hears a lot, it is that this is Asia’s century. That may very well be the case and no doubt once the extreme irritation of Covid is out the way, Asia’s stellar growth will continue its merry trajectory. But there is one area where returns look less bright within the region, certainly compared with the USA: MPF funds. Spy has been digging into MPF returns and it is extraordinary how US equities have truly outperformed their global peers within those lists. Take the funds offered in the category of Asia ex Japan equity over the last ten years. The average fund listed has returned a decent 95%; the leader is Allianz’s Asia Fund, up 133%. Now compare that to the US equity category. The average fund is up 188%, with Mass Mutual’s US Equity blowing the lights out – it is up 250%. America may have problems coming out of its ears, but its stock markets have hardly looked down for years, rewarding foreign investors handsomely.
Value. Good Value. Great Value. Everyone loves a bargain, but in investments, the “value” style that made investors such as Warren Buffet famous has been as unloved as a person with a cough in the time of the pandemic. Spy was delighted, therefore, to see Wall Street stalwart, Neuberger Berman, picking up on this oddity and making the case for value investing. As they point out in a CIO perspectives piece: “There are portfolio managers working today who have never seen persistent outperformance by US value stocks in their careers. Some analysts were in middle school the last time value had a good run. That is remarkable for an investment style that had exhibited systematic outperformance for decades, according to scores of academic studies. Favouring stocks that trade at relatively low multiples of their earnings has often been held up as the essence of prudent investing.” The team are currently rather bullish on financials, materials, energy and industrials and, if the last few weeks are anything to go by, they could have much more to sing about in the next few years.
Vanguard has managed to raise a few eyebrows this week by abandoning its efforts to go it alone in the Chinese market. Vanguard’s story is a salutary one. Having a giant brand back home is absolutely no guarantee of success in the highly idiosyncratic market of retail investment in China. China, reckons Spy, has been remarkably savvy about its financial markets, protecting and nurturing its own banks, insurers and asset managers, so that when the final opening up began, local firms were already street-smart and highly competitive. There are many non-American firms that have struggled to crack the US over the last century. Spy suspects many Western firms in China will have similar challenges and few true successes.
From Spy’s special drawer reserved for ETF names that seem particularly silly, comes this week’s special. It is the Gabelli Love our Planet & People ETF (LOPP). Spy has always felt that if the opposite of what one is stating is obviously awful, one has not said much in the naming. Nobody is going to launch a “hate our planet and people” fund, are they? For what it is worth, this is just another bog standard ESG fund that is actively managed. “Lopp off its head”, said the Queen?
The Dow Jones Industrial Average, or the Dow, may have wobbled yesterday, but this week it racked up its fifteenth All Time High for the year, and we are only twelve weeks into 2021. Since 2013 the Dow has been smashing records like a bull in a china shop. This peculiar index and US bellwether has hit 260 All Time Highs in less than eight years. This week J.P. Morgan and Goldman Sachs also joined the fun – they both hit All Time Highs, too. They both just happen to be Dow Jones components. Fancy that!
Until next week…
