If Spy has heard it once, he has heard it fifty times in the last month: private markets. It seems wealth and asset managers are looking ever more aggressively at the private market space. Spy had a glass (or two) of a particularly fine chablis with a multi-family office specialist in Central last night and that was pretty much the only topic of conversation. He was hunting around for every possible opportunity to place cash “off market”. The subtext could not have been any clearer – current public market valuations are so steep, there is a desperate hunt going on for alternatives to protect recent gains. The current themes: fintech, green energy and commodities.
Gam’s roll out in Singapore gathered pace this week. The Swiss asset manager has hired Nicholas Tan to grow its distribution in the Lion City. Nicholas was previously with Capital International where he spent three years. A few months ago, Gam announced that it had hired Terence Bong from Franklin Templeton to lead its business in Singapore. Gam has had success in the last twelve months with its Luxury Brands Equity strategy, which is up about 39%.
Spy notes that Eastspring has added another strategy to FSMOne this week. Asia’s largest retail asset manager has listed its Asia Sustainable Bond strategy alongside a few hedged share classes onto the consumer platform. The fund is now eighteen months old and has delivered about 5% annual returns since inception. The fund is yet to get a Morningstar rating.
One bank feeling bullish on Singapore’s future wealth is Credit Suisse. The Swiss private bank, in a report this week, reckons Singapore millionaire numbers will grow from 270,000 in 2020 to 437,000 by 2025. Although this is pacey, it expects China and India to grow its millionaires, proportionally, even faster. Total wealth in Singapore grew to about $1.6tn in 2020. Apparently about 5.5% of Singapore’s population are now classified as millionaires. Spy’s conclusion? Being a millionaire ain’t what it used to be. Spy would not be surprised if private banks in Singapore get a whole lot more strenuous on the entry limits to the services.
Fidelity shared a pretty frank piece on ESG investing this week by Tom Stevenson, one of their most public investment directors. He makes the eminently reasonable point, that “perhaps the real conclusion from all this is that, quite rapidly, ESG investing is becoming just plain investing [emphasis from Spy]. Companies that rate highly on the imperfect and inconsistent sustainability measures that we currently have, perform well in stock market terms, because they are, quite simply, better companies.” Spy strongly suspects this is the real truth: ESG criteria, will over time simply become fundamental analysis quality criteria.
This week the Bank of International Settlements (BIS) had a real go at crypto in its annual report. The organisation reported among other rather scathing analysis: “Bitcoin, in particular, has few redeeming public interest attributes when also considering its wasteful energy footprint.” Spy can’t help but feel there is a whiff of panic here as central banks print like billy-o, there is a palpable fear they may lose control of the money ecosystem and, more importantly, their monopolies on currency creation. One bank ignoring the BIS report is Citibank.The wealth manager has just formed a new Digital Asset Group, which will be “focusing on all aspects of this fast-growing space of blockchain enabled finance.” In life, it is far more important to watch what people actually do, instead of what they say.
This week’s news that JP Morgan Asset Management had bought Campbell Global, a specialist investor in forest management and timberland, raised Spy’s eyebrows. The company manages $5.3bn worth of forestry assets covering a total of 1.7m acres worldwide and has planted over 536m trees during the past last 35 years. For JP Morgan AM, the acquisition adds another alternative asset class for its investors and, perhaps even more importantly, sends a strong message that net zero is not just a marketing ambition for the firm. The asset manager now has $2.5tn in AUM as of March 2021.
Last week Spy was talking about butterfly wings beating in an Amazonian forest causing cyclones in the Philippines. If Spy was looking for another butterfly flutter that might affect the wealth management world, he could do worse than look at Vanguard. Since 2015, Vanguard has had a highly technology-driven advisory service named Vanguard Personal Advisor Services, something it is now growing rapidly. It doubled in size last year alone. The annual fee it charges of only 0.3% is the kind of disruptive number that sends shivers down the spine of wealth managers who typically need 1% or more to survive. Although there is no indication that Vanguard is bringing the service to Asia any time soon, it does point to the direction of travel of advisory costs. Where Vanguard led over the last 30 years, much of the industry has followed.
Singapore is apparently now host to more than 1,400 fintech firms employing more than 10,000 people. It is deeply gratifying to Spy to see such a massive flood of entrepreneurship and reckons it bodes very well for the future of finance in the country.
Twitter quip of the week: “I have now done one of those online trading courses that promises to teach you everything you need to know about investing. I still invest badly and lose money, but at least I understand why I am losing money now.”
Close to FSA‘s Hong Kong office in Causeway Bay, Mirae Asset has blazoned its Global X brand across the Sogo building.
In Singapore, Spy came across a new consumer ad campaign by Manulife Asset Management. It wants investors to discover fresh income streams. Don’t we all!
Until next week…
