“How are you enjoying the year of the Ox?”, Spy asked a friendly bond portfolio manager this morning over a quick coffee in Central. “It seems it is not only Reddit punters who are discovering the oldest market lesson: things go down as well as up,” he responded with a wry smile. He added, “We might just be about to find out whether MMT (Modern Monetary Theory) is just a load of old baloney and that if you print enough, the market will eventually respond.” There are a huge number of investors across the Asian wealth management space, knee-deep in leveraged bond portfolios, who are going to be very interested in the answer to that question, reckons Spy.
Spy understands that UBS Asset Management in Hong Kong has had a change. Sharon Wu, who was until recently head of marketing for Greater China, has stepped down from her role at the Swiss asset manager. Spy has no details on who has replaced Sharon at this stage. Ava Cheng remains director of marketing for Apac in Hong Kong. UBS AM has had tremendous success with its Technology Opportunity fund, which has returned 56% in the last 12 months. At the end of 2020, UBS AM had $1.1tn under management, this is an increase of $300bn over the last three years alone.
Fidelity has been adding to its ETF range in the last month, notes Spy. The firm has made four of its key equity and property strategies available as ETFs: Fidelity Growth Opportunities, Fidelity Magellan, Fidelity Real Estate Investment, Fidelity Small-Mid Cap Opportunities. The funds are all active funds, thus continue to hide their full holdings. These listings add to the trend of managers making their strategies available in whatever format investors prefer. The Magellan Fund, launched in 1963, is one of Fidelity’s oldest and most storied strategies. At one time, under Peter Lynch, the fund had more than $100bn in assets. It currently has $22bn in it.
It is usually Warren Buffet who gets all the limelight. Not this week; it was his billionaire partner, Charlie Munger, who got heads turning with his views on diversification. “A lot of people think if they have 100 stocks they’re investing more professionally than they are if they have four or five. I regard this as insanity. Absolute insanity. I think it’s much easier to find five than it is to find 100,” the 97-year-old legend argued. Spy is not sure it is insanity, but certainly some food for thought.
With all the bond excitement this week, Spy thought he would check up on the views of the ever-reliable Bond Vigilantes team at M&G. At the time of writing they had not added anything specific on this week’s gyrations, but Spy was pleasantly surprised to see the team have got themselves a shiny new website with some rather funky new branding. Spy suspects there will be much debating and coffee consumption in their board rooms today.
BlackRock has changed some of its investment views in February. In a new outlook piece their team states, “We see a more muted response of government bond yields to stronger growth and higher inflation than in the past, as central banks lean against any sharp yield rises.” ‘Lean against’? Is that what we now term blatant yield suppression via QE by our financial overlords? When it comes to central banks, Spy is tad miffed we don’t call a spade a spade.
You have to hand it Charman Jay Powell. He really should have his own comedy show. He told Congress this week, with a straight face, “It may take three years for inflation to hit the Fed’s goal of 2%.” Just read that slowly, three years, as in, it will be 2024 before we hit 2% inflation. Copper is up 70% in a year, gasoline is up 70% since November, alone, and lumber is up 52% over the same time period. That does not even cover the stock market itself and everyone’s favourite non-correlated assets, Cyrptos. Spy is not sure which world Powell lives in, but it is not planet earth. As the bond markets gently reminded him this week.
It is always good to know what people really care about it in times of stress. This week, in one of the most dramatic market weeks, among many of recent times, it was pleasing to see people had a sense of perspective. On Singapore’s Business Times website, the most popular stories this week were listed as follows:
It is somehow, deeply reassuring, that Mr. Potatohead’s new gender is the most read article, outflanking Gamestop volatility, bond sell off and gold’s swoon. When frivolous stories are not top of the list, Spy might really start to worry.
An eagle eyed spotter in Spy’s team came across a new advert by Fidelity in the consumer media space. The firm is promoting perennial favourite, Asian Income.
Until next week…
