While Spy enjoyed a glass of Bordeaux last night, he pondered that there must be some extremely nervous asset management executives about. The reaction to DWS’s share price plunge this week, as the US’s Securities Exchange Commission opens an investigation into the German asset manager’s possible greenwashing of funds and exaggerated net zero claims, must have the sweat dropping down their brows. If Spy has spoken to one, he has spoken to a dozen ESG specialists who reckon that their own firms have been greenwashing so much they happily name the ESG department “The Laundry”. One Spy confidant, who shall definitely remain nameless, exited his ESG role from a prominent global player because, in his words, “I was constantly told to find a way to make our investments palatable to our ESG marketing strategy, rather than help implement policies that were truly ESG appropriate.” Mirror, mirror on the wall, who is the greenest of them all?
Has there been a better time to be a fund selector? Spy peeked at Standard Chartered’s focus fund list this week. The firm currently has 263 focus funds, and all except five of them is positive over the last twelve months. And even those meagre five funds, actually turns out to be one, with five different share classes: the UBS China Opportunity Fund. The best performing product is Blackrock’s World Financials, which has been on a tear and is up 57% over twelve months. Spy can’t remember a recent period when financials topped the charts – it has been tech, mining or China for years. The portfolio managers should send a large box of chocolates to their favourite central bankers.
When we talk about growth, we tend to talk about companies and how they have grown. How about an entire industry, growing thousands of percent? China’s asset management industry has become a behemoth over the last 23 years. In 1998, according to a report Spy dug up, KMPG claimed that the Chinese asset management industry had merely $1.27bn in assets under management. Caixin, the state-affiliated Chinese newspaper, reported this week that the industry now has $13trn in AUM. That equates to industry growth of more than 10,000% in 23 years. And, the market shows absolutely now sign of slowing down any time soon.
And talking of China’s domestic funds market, Blackrock is about to test its native mettle on the market within sixty days. The world’s largest asset manager will launch its 100% owned funds into the market later in the year. FSA reported that the Blackrock China New Horizon Mixed Securities Investment Fund will be managed by Alex Tang, a 16-year veteran of investing in China’s A-share markets, and Shan Xiuli. It will focus on five growth areas including new energy, retirement and digital transformation, according to the company. The fund will be distributed by three Chinese lenders, led by China Construction Bank, along with seven brokerages including Citic Securities.
Long standing chief executive of great global firms often leave a memorable quote or two during their tenure, reckons Spy. For Chuck Prince, the former CEO of Citibank, it is surely, “As long as the music is playing, you’ve got to get up and dance.” After such a stellar bull run, most equity investors must be looking across at the DJ and wondering when he will switch the turntable off. One investor who clearly thinks the music might stop any time soon, is David Giroux of T Rowe Price, who runs its Capital Appreciation fund. The product has significantly outperformed its peers this year. Is this important? Possibly, as Giroux has a record of impeccable timing, according to the FT, of consistently buying bottoms and picking tops for the last 15 years. Is this time different?
If you can’t beat ‘em, join ‘em, wonders Spy? Capital Group, one of the last remaining massive American asset managers not to have an ETF range, announced it is going to launch its own ETFs in the US market by the end of the first quarter next year. Its initial stable will be six strong: five of them will be equity funds and one bond offering. The funds are going to be totally transparent and will be built from the ground up as new strategies, not replicating existing ones. The funds will all be active. Better late than never, supposes Spy?
It is the very first rule of investing: Wall Street is a selling machine. One of the finest in history. And how have the boys and girls of The Street been doing over the last year? A good year? A great year? A blow-out-unbelievable-mind-numbing year, reckons Spy. Wall Street has helped firms issue record amounts of stock. Amounts that make the charts look positively dangerous. For those market watchers looking for a bubble, Spy offers you Exhibit A. What goes up, must come down.
Apple’s CEO, Tim Cooke, is about to be awarded enough stock to make him a billionaire. Since he took over as CEO a decade ago on 24 August 2011, Apple’s market cap has jumped from $340bn to $2.5tn. If Apple were a country, how would its market cap compare to other countries and their GDPs? It is now larger than Italy ($2.0tn), Brazil ($1.8tn), Canada ($1.7tn), Russia ($1.7tn), South Korea ($1.6tn), Australia($1.4tn), Spain ($1.3tn), Mexico ($1.1tn) and Indonesia ($1.1tn) and the vast majority of the rest of the world, too. Cooke deserves every penny of stock his $750m award, reckons Spy.
Spy’s quote of the week is an old one. “I believe that banking institutions are more dangerous to our liberties than standing armies”, said Thomas Jefferson. The anarchic Bitcoin fanatics are convinced this particular American founding father is quite right.
Until next week…