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The FSA Spy market buzz – 26 April 2019

Change at Value Partners; RWC launches; Holding underperformers; UBS rakes in cash; FSM One’s new funds; New ETFs; Global or not; Crypto comeback; advertising and much more.
The FSA Spy market buzz - 06 April 2018

Spy took the opportunity over the Easter break to escape Hong Kong and shoot up to Japan to catch the tail end of the Hanami season and, naturally, sample sake and local whisky in suitable quantities. Spy’s perfect Easter rabbit would ignore the chocolate and deliver a bottle of Hibiki Harmony instead. In Japan, all the talk was of the Rugby World Cup this year, the Olympics next year and the surprising strength of the yen. Unsurprisingly, nobody seemed inclined to chat about Carlos Ghosn who was still languishing in prison over the weekend. The only bit of fund news Spy gathered from local media was that China and Japan may finally list each other’s main index ETFs on their local bourses. Hardly ground-breaking stuff in 2019, but progress of a sort. Harmony indeed.

News reaches Spy that there has been a change in the marketing and comms department at Value Partners. Rev Hui has stepped down as senior manager of marketing and communications and has been replaced by Lei Xuan. Lei has joined VP from S&P Global Market Intelligence. Spy understands that Rev is remaining in the asset management industry and will shortly resurface at another manager in Hong Kong. Value Partners China A Shares Select RMB fund is up a stellar 26% in the last 6 months.

RWC, the boutique asset manager, is following up its successful GEM Fund with a “Next Generation Emerging Markets Fund”. Unsurprisingly, Asia is well represented in the new fund with markets such as the Philippines and Vietnam featuring prominently. RWC’s co-head of emerging and frontier markets, James Johnstone, commented: “Smaller emerging economies and larger, more liquid frontier markets offer a compelling investment opportunity, similar to that which we saw on offer in larger emerging markets 10 to 15 years ago.” Spy, for a long time, has felt emerging markets is a silly term to apply to many of the traditional EM markets which by now have highly liquid stock markets and vastly improved corporate governance. Spy imagines RWC is right on the money with this one.

How long would you hold an under-performing fund? That was the question polled at FSA’s recent Alpha Portfolios Forum for fund selectors in Singapore. The answers ensured Asia’s reputation for short-termism remains firmly intact, in Spy’s humble opinion. Half of all respondents would drop a fund after a single year of under-performance, while one quarter would give 2 years and another quarter 3 years. Spy strongly suspects that 12 months is simply not enough time for many funds to realise their best ideas.

UBS was in the news this week for some rather dismal Q1 results. Profits 27% down on last year and investment banking having a dreadful ride. This can hardly come as a surprise to UBS-watchers, after all Sergio Emotti did warn things were sluggish a few months back. What did not surprise Spy, however, was that wealth and asset management in Asia continued to power ahead. The bank brought in $16bn of net new money in Asia, the lion’s share of its $22bn for the whole world. From an outsider’s perspective, UBS’s wealth brand in Asia has never seemed stronger or more dominant.

FSM One in Singapore has had a few new funds added to its range in April. Lion Global’s Vietnam Fund, which launched way back in 2007, has finally joined the party. Allianz’s China A Shares and Neuberger Berman’s Next Generation Mobility and its shiny new China Bond Fund have also become available on the platform. That brings to 24 the number of new funds (or varieties of share class) added to the platform this year.

As most wealth managers in Asia know, ETFs have generally struggled to attract assets in the wholesale space in the region. By contrast Europe and the US continue to see an ETF flood. Since the beginning of 2019, no fewer than 77 new ETFs have been listed on US exchanges alone, covering a myriad of ideas, sectors and strategies. Spy can’t help but think that a wave of de-listings will be coming soon as such a variety of strategies struggle to gather a viable asset base with their notoriously low fees. How many investors really need a US Big Banks Index -3x Inverse Leveraged ETN, for example. But, then again, what does Spy know?

Spy has been examining Standard Chartered’s focus fund list. One standout fund on the list is Allianz Global Investors Global Artificial Intelligence Fund. The strategy has done particularly well during the last year – up more than 25%, no doubt making the selection team rather happy. Spy’s surprise came not in the fund’s performance, or Stan Chart’s selection thereof – but rather how the “global” bit of the name is a tad misleading. According to AGI’s latest available fact sheet 88.5% of the fund is invested in the US. France is the next biggest geographic allocation with 2.7%, followed by China with 2.4%. No doubt the fund can go anywhere, thus the “global”, however the action is all in the US and every other country is merely playing catch up. The next time Spy reads an alarmist book that claims the US is finished (doomed, over, declining – choose your favourite adjective) by Asian luminaries such as Kishore Mahubani, he might just the hand over the AGI fact sheet and leave it at that.

Spy is not sure what the best performing asset class or idea is this year but he is pretty sure most people are not looking too closely at the crypto market for an answer. And, that is what bull markets like best – stealthy rises when the media are looking the other way. Bitcoin has bounced 42% this year, proving to Spy that the Gartner hype cycle is seldom wrong.

Spy’s photographers have been hunting down new advertising. For JP Morgan Asset Management, it is the 10th anniversary of their Global Income Fund and even if Spy could find no cake, they seem to be celebrating in Raffles Place, Singapore:



Meanwhile, a few feet away Fidelity is doing its best to remind Singaporeans that JPM is not the only multi-asset income fund in town:



Returning to Hong Kong airport after the Easter break, Spy spotted this advert for J Safra Sarasin, the first time he has seen such a prominent advert from the Swiss Bank:



Until next week…

Part of the Mark Allen Group.