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The FSA Spy market buzz – 27 April 2018

JB Hires and so does Capital Group, Mobius snags some old colleagues, Lombard Odier cracks Thailand, Pimco Income, DBS Savings, OCBC fish, Gold and much more...
The FSA Spy market buzz - 06 April 2018

Spy has been travelling in Europe this week. The continent is emerging from its wintery slumber and going back to its traditional concern: overregulation. Whilst the beer lives up to its usual high standards of taste, by which Spy means it actually tastes of something, the joyous hops could not drown out the miserablism over Mifid II. Throw GDPR and Brexit into the mix and one could have mistaken the delightful bar Spy was in for a torture chamber. The Inquisition’s Torquemada seems to have devised less devilish instruments of pain than some of the new regulations, which almost everyone Spy talks to thinks will do practically nothing to improve the market. Asian regulators, we hope you are listening!

News reaches Spy that Jia Hao Sng, who has been handling discretionary portfolios for Taiwan’s CTBC Private Bank in Singapore, is leaving the firm. Jia Hao is taking up a portfolio manager role with Julius Baer’s DPM team in Singapore. As with so many other Swiss banks, JB is expanding the role of its discretionary team as mandates grow and more assets flow into that segment. There is no news yet on who might replace Jia Hao at CTBC.

It seems M&G and Capital Group are playing swapsies. FSA reported recently that William Tan has taken up the role of head of intermediary business in Asia for M&G, having held a similar role at Capital Group in Singapore. Spy has now learned that Jeik Sohn, who has been with M&G for 12 years, most recently as an Investment Director, is joining Capital in Hong Kong to manage their intermediary business. Jeik is not due to begin at the business for several months, likely at the end of the summer.

The news that Franklin Templeton’s Carlos Hardenburg and Greg Konieczny, long time star emerging markets portfolio managers with the American giant, had both stepped down from the business earlier in the year caught many by surprise. Suspicions soon swelled that Mark Mobius had his eye on them for his new firm, Mobius Capital Partners. Apparently at a party next week in London, it will indeed be confirmed that the pair have joined their old leader. MCP is aiming to bring ESG to emerging markets, starting with India.

Those dithering and dallying about whether to tap the Thai market should take a peek at Lombard Odier, Spy reckons. In just three years, LO’s partnership with Kasikorn has resulted in assets under management swelling to the healthy $1 billion mark. LO is hardly the only organisation making inroads in that market. The roads to Bangkok may not be paved with gold as in days of yore, but certainly a few baht seem to be kicking around.

The markets are a great leveller: for investors, for managers and, indeed, for commentators too. Those practically countless RMs who have recommended the Pimco GIS Income Fund all of last year must be watching the screens carefully as the bond market volatility has thrown a spanner in the works of a Favourite Trade. GIS Income is down 0.95% year-to-date. Not much compared to the index which has fared even worse. But that is only part of the story. As we all know, most PBs lend up to four times on low volatility FI funds and therefore the dip for many investors will be rather more exaggerated this year. Year-on-year comparisons may make uncomfortable reading.

DBS has 523 funds from 20 asset managers listed as available for regular savings plans. Looking at the listSpy was intrigued to see whom DBS favours for which asset classes. For example, the three Aberdeen funds are all Asian equity: Indonesia, Pacific and Thailand. The one Allianz GI fund gets the nod for US Equity. Goldman Sachs AM is also only given one slot: Emerging Markets Corporate Bond. Franklin Templeton and Nikko, by contrast, each have 16 funds covering a broad range. Spy can’t help but wonder: does the asymmetric dispersion on this list represent fund selection decisions made a decade ago?

Do you ever get the feeling someone knows something you don’t? Spy came across the Da Cheng China RMB Fixed Income A fund which is up a whopping 19.36% year-to-date according to data from FE. In this bond environment, someone is doing something that most are not.

Do as I say and not as I do. That seems to be central bank policy. Old Mutual Global Investors’ Ned Naylor-Leyland who manages their gold fund, pointed to the following recently. Spy reckons there is great wisdom here.

Source: Old Mutual Global Investors

Spy longs for the days of the wackily named ETFs that seemed to be launched weekly. “HACK“, the cybersecurity fund, and “Alternative Harvest”, the marijuana fund, spring to mind. This week Spy spotted the Hartford Schroders Tax-Aware Bond ETF. This fund brought visions of an all-knowing, sentient fund that is aware that government hunts out your tax dollars and thinks about it, moodily. The truth seems a little more prosaic as the fund merely invests in different US bonds depending on their relative taxed return. Damn.

Hats off to OCBC Wealth. They managed to produce an asset allocation graphic that looks just like a fish. Spy was caught off guard when he first saw it, but considering all the other nonsense charts he sees on a daily basis at least it has the advantage of being fun.

Source: OCBC Wealth

According to some “overheard” research (which Spy takes with a pinch of salt) by 2022 50% of all searches are going to be conducted by voice. Think Apple’s Siri, Amazon’s Alexa, Microsoft’s Cortana and others. In Spy’s experience Siri can barely differentiate between obvious requests such as “Siri, what’s a good wine?” and “Siri, what’s a good time?” How these smart services are going to differentiate between, for example, Fidelity Global Dividend A-Mincome(G)-AUD-H and Fidelity Global Dividend SR-ACC-SGD (CPF), is slightly beyond Spy. Still, if the prediction has any validity whatsoever, the industry is going to have to think hard about keeping fund names far simpler.

Sports language is so often applied to financial markets, the two industries may almost be joined at the hip. Spy’s quote of the week comes from the Dutch football legend Johan Cruyff, who said: “If you can’t win, make sure you don’t lose.” With volatility increasing in the fixed income market, never has the glorious game produced a more apt line.

Spy’s trusty band of photographers have spotted a new bus campaign trundling around Hong Kong by Fidelity promoting high yield, and Invesco’s promotion of its new Belt and Road Bond Fund in the busy MTR tunnel in Central, an ad almost as long as the Belt and Road itself.

Until next week…

Part of the Mark Allen Group.