Posted inFSA Spy

The FSA Spy market buzz – 2 February 2024

Managed Nasdaq floors, results from Janus Henderson and Franklin Templeton, PineBridge goes up for sale, Uninspiring sales prep talks, Teddy Roosevelt’s wisdom, The year of the Dragon and much more.

“Did you know that the most successful people were born in the Year of the Dragon?” claimed one misguided but utterly earnest young wealth manager to Spy this week over a beer. “Yeah, John Lennon, Martin Luther King and the mighty Bruce Lee.” The fact all three of those people died prematurely did not deter the fellow one iota. Spy was underwhelmed and even more so when the fellow also pointed out that Vladimir Putin was born in a Dragon year, too. Nonetheless, Spy freely acknowledges that some people do indeed believe that Dragon years are by far the luckiest. Dragon is powerful, endlessly energetic and full of vitality but also goal-oriented and idealistic not to mention romantic, according to one breathless interpretation. Spy is therefore rather surprised that a Dragon fund is not being rushed out to coincide with the auspicious year about to begin next weekend. Every other thematic under the sun has been tried, so why not a Dragon fund that will only invest in companies that come to market this year, or, perhaps, for variety, arrived in 2012, 2000,1988, 1976, etc? It can’t be any worse than some of the other lunatic ideas Spy has seen over the years.

“There may be trouble ahead, but while there’s moonlight, and music and love and romance, let’s face the music and dance”, sang Nat King Cole. For investors worried that there is volatility around the corner, a new ETF has come to market promising a floor, not a dance floor.  The Nasdaq-100 Managed Floor ETF by Innovator is using an options strategy to cap drawdowns in the popular tech-biased index. No matter any brilliance of the fund design with “the disciplined options overlay” managed by subadvisor, Parametric, the fund’s small print still reminds investors that the floor may not hold – although there is no specific mention of dancing. For those in need, the fund is trading in the US under the ticker, SFLR and has an annual fee of 0.89%.

The reporting season is open for listed asset management companies, notes Spy. Janus Henderson unfortunately announced more outflows in the last quarter of the year of $3.1bn. Total outflows for 2023 were $0.7bn, which is a dramatic improvement compared with 2022 when outflows were above $30bn. Assets under management increased by 9% quarter-over-quarter and 17% year-over-year reaching $334.9bn as of 31 December.

Franklin Templeton has, similarly, seen a slow-down in the volume of assets pulled from its brands, but nonetheless has seen more cash bleed in the last twelve months. Investors removed $50bn of mutual fund assets in 2022, with a reduced pace of $30bn in 2023. The bright spot was ETF flows, which increased by more than $1bn in the last quarter. It is the fifth consecutive quarter of $1bn+ ETF inflows at the American firm. Jenny Johnson, Franklin Templeton’s CEO, acknowledged that ETFs are likely to “cannibalise” some of its mutual fund business.  The firm, post its Putnum acquisition, has about $1.5tn in total AUM.

Is one of Asia’s leading asset managers about to change hands wonders Spy? Reuters seems to think so. The news service is reporting that Richard Li’s Pacific Century Group is putting PineBridge up for sale. Since the firm acquired PineBridge from American International Group in 2010, AUM have nearly doubled to $157bn from $87bn. PineBridge has more than 700 employees across 25 offices, including 230 investment professionals, according to the report and manages about 25% of the assets of Hong Kong-based FWD, an insurance business also owned by Pacific Century. Apparently, J.P. Morgan is handling the sale.

Spy was with several asset management sales people this week in Hong Kong. Talk turned to the least inspiring pet phrases of their respective sales chiefs. “We must get our share of wallet” came in for a drubbing. As did, “We have to play for a full 90 minutes, team.” But by far the worst line from a particular British firm, was, “Let’s make this elephant dance.” Indeed.

Spy’s quote of the week, admittedly a long one, comes from former United States President, Teddy Roosevelt. “It is not the critic who counts…the credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.” For every single person out in the marketplace building something of value, remember the above. Your effort is worth the price.

Until next week…

Part of the Mark Allen Group.