Spy attended a raucous quiz night in Hong Kong last night. In between dozens of questions on everything from What is the substance that is emitted by a cathode ray tube?* to What substance is the Mona Lisa painted on?** to When did Confucius die?***, a wine lake was consumed, friendly insults were hurled and many smart, very confident people were shown to have deeply faulty knowledge, especially when their iPhones were taken away. It occurred to Spy that that the wealth management industry is filled with financial advisers who could be accused of similar overconfidence: rather high convictions are held about very tricky investing situations, when, more often than not, just like Spy’s dubious quiz colleagues, they don’t have the right answers at all.
Pacific Asset Management, the London-based multi-asset and emerging markets boutique, has hired two industry veterans to help build its Middle East and Asia sales, notes Spy. Dave Cockerton and David Macdonald have both recently joined the firm. Cockerton and Macdonald both have Asia experience having worked in Hong Kong and Singapore respectively. Pacific AM has registered two funds in Singapore for the accredited investor market targeting high net worth individuals.
Spy has been waiting patiently for this day to occur: a major bank in Southeast Asia rolling out a robo-advisor service. Yesterday OCBC announced the launch of RoboInvest, a simple, accessible robo-adviser targeting every day consumers. Until now, every player with a robo-solution in Southeast Asia has seemed too small to gather assets rapidly enough to become sustainable. However, banks have deep pockets, much longer time horizons, and, more importantly, access to huge numbers of customers. At 1.5% per annum for the first $500,000 of investment, RoboInvest could not be described as cheap compared to some American and European solutions, but is nonetheless highly competitive in the Singapore landscape of mass wealth management. What really caught Spy’s eye, though, is that OCBC is claiming all 28 portfolios, including highly thematic ones such as technology and fast-moving consumer goods, will be automatically adjusted by an algorithm monitoring the investments. This implies the service is a “true” robo-advisor not a just a bunch of portfolio managers with a glitzy front end. Consumers, it appears, will still need to approve the rebalancing each time though. Spy will watch this space with interest.
It has been a while since Spy looked at Hang Seng’s New Fund Express, which lists funds that are new to its platform in Hong Kong. Out of 28 funds listed (including various share classes of the same funds) only 8 have managed to give a positive return in 2018 thus far, demonstrating what a hard time it has been to deliver in this environment. Allianz Global Investors is the stand out performer with its Artificial Intelligence Fund up a whopping 17%. In the runner-up spot, BlackRock’s World Healthscience Fund is up nearly 11%.
Investors in China have had a hard year – the Shanghai Shenzhen CSI 300 index is down nearly 18% this year. No doubt that is making investors a tad anxious. This week Aberdeen Standard Investments Asia head, Hugh Young, penned some thoughts on China on ASI’s Thinking Aloud blog. It is no surprise to Spy that Mr Young and his experienced team remain convinced on China long-term and are watching carefully for bargains. One point made in the article which struck your humble Spy, for all those wondering how the trade war plays out, was this, “While China has announced it will impose its own tit-for-tat tariffs on US products, its retaliation through trade will be limited because its US imports are insignificant.” I would imagine that Trump could not have put it more clearly himself.
It can hardly have gone unnoticed by the industry that JP Morgan Asset Management has announced about 100 job cuts this week, muses Spy. Whilst the headline number sounded rather large, the cuts are global and cover many functions, as reported by FSA’s sister publication, Portfolio Adviser, and therefore drop in significance and sound a lot more like a tidying up exercise. Reading this story, which had a number of commentators citing cost pressures and the rise of ETFs as the reason for the cuts, Spy was reminded of the famous quote by Emperor Napoleon: “Every now and then one should shoot a general to encourage the others.” A few, well-publicised job cuts, no doubt, encourages the others especially when thinking about leaner and meaner ETF competitors…(Besides, Spy would wager a good bottle of Chianti, that within a year or two, JPM AM, would have hired at least 100 people, albeit in slightly different roles. The death of the asset management industry has been greatly exaggerated and this time is no different.)
Spy’s trusty band pf photographers have seen new advertising across Asia this week.
Aberdeen Standard appears to be bringing Africa to Taiwan with local news site marketing for their Frontier Markets Bond Fund:
Franklin Templeton has taken over trams in Hong Kong with an aspirational advert focusing on one aim of investments: giving the investor more fun:
Also in Hong Kong, at the airport, Shanghai Trust is pushing its family office services:
Until next week…
*electrons
** wood
*** 479 BC
