Spy was sitting next to a fintech bore in a bar this week. He droned on to his companion about how his technology was going to change the world and that every single bank and wealth manager he knew was “a dead man walking”. As the beers went down, his claims became more and more extravagant. Spy looked around the bustling bar and watched men and women doing what they have always loved doing – getting together, face-to-face. Spy contemplated recent pronouncements by PB CEOs about their strong desires to hire more RM staff. Yes, thought Spy, to paraphrase Mark Twain, the death of the human salesmen has been greatly exaggerated. None more so than in wealth management. Fintech bores be damned.
News reaches Spy that Stephen Tan, formerly head of distribution in South East Asia at Amundi has stepped down from his role which he has held for nearly two years. Stephen is moving to Fullerton Asset Management. There is an old saying: “People don’t leave companies, they leave bosses.” True true, says Spy. And, of course, perhaps it works in reverse; people follow bosses too. Who is the CEO of Fullerton AM, you ask? That would be Ms Jenny Sofian, former CEO of Amundi. Fullerton’s China Equities A Fund is up 29% while Amundi’s star performing fund has been Thai Equities – up 32% over the last year.
It appears Bank of Singapore (among others) has been doing a roaring trade in Blackrock’s Dynamic High Income Fund with numbers as high as $1.4bn in sales over the last few months. It should surprise absolutely nobody that the fund is focusing on six areas that are less exposed to rate rises: covered call writing, preferred stocks, REITs, floating rate loans, non-agency mortgages and commercial mortgage-backed securities. Is there a lesson to be learned here? The search for yield goes on at pace, and, those that find it shall be rewarded.
This morning you all will be aware that Elon Musk, the maverick and mercurial CEO of Tesla seems to have had an outstandingly honest moment on his earnings conference call yesterday. Musk described an analyst as “boring” who asked “bonehead questions”. The market threw a tantrum and knocked the market darling’s stock yesterday. Spy suspects there are one or two fund sales people in the market who have similar fears when bringing a particularly high conviction manager to meet distribution partners. Spy has heard similar tales of a PM saying “Don’t buy my fund” mid meeting and then giving snappy or irritated answers to perceived dumb questions from journalists, selectors or investors. And, yet, here is the rub: investors want managers who have personality, who have strong ideas and strong opinions and are very smart people. Sometimes those ideals are going to clash. Just sayin’.
Trilake Partners have been putting out their witty newsletter again. Spy spotted some more wisdom from the team. “Only 5% of Mainland Chinese have passports. But the tourism boom is a global phenomenon. Instead of buying Ctrip at 40x earnings, buy airports instead. Travellers may or may not stay in this hotel, fly that airline or visit those tourist traps, but they will definitely go through Customs and Immigration.” Nailed it.
What has been selling in Hong Kong Retail? Hang Seng Bank’s handy top sales guide lists the following:
- AB Emerging Market Multi Asset
- Allianz Income and Growth
- Amundi HK Balanced
- Hang Seng China Enterprises
- Hang Seng China Enterprises Index Leveraged
- JP Morgan Asia Pacific Income
- JP Morgan US Technology
- JP Morgan Multi Income
- JP Morgan Pacific Technology
- Value Partners Greater China High Yield
Spy took a closer look at those funds and the year to date numbers on average just hang on to the positive side for the year. But, take a closer look and over the last three months, nine out of ten of those are negative. Only JP Morgan’s US Tech is up over the last three months. There must be a lot of managers hoping that May delivers an uptick or, finally, the year-to-date figures will show the challenges. This reminds Spy of Warren Buffet’s tide going out. We shall soon see who has gone for a skinny dip.
The asset management industry has been accused of being sexist, misogynist and a host of other modern ills. If this week’s ambitions from Mark Mobius, who is aiming to raise a billion dollars for his new ESG EM Fund, are realised, asset management can at least say it is not “ageist”. Mr Mobius is 81 years old. Is there another industry on earth which embraces experience with such enthusiasm?
Is it possible to be a mid-sized player that distributes well, or at least in any volume, through both private banks and retail ranks in Asia? That question must be plaguing a number of asset managers as they grow in the region. If one scans the buy lists of most retail banks it is a litany of “usual suspects” – large, well established asset managers with developed brands. Meanwhile, in private-bank-land, barring some notable exceptions, focus lists are made up of smaller players (measured by Asian footprint) with niche offerings that happen to tickle a fancy. Never the twain shall meet, or just a perception?
Spy is hesitant to criticise his fellow journalism community, however, he can’t let the obvious pass. This headline in the FT continues to promote a ridiculous fallacy.
This headline tells us that passive investors have no choice but to hold China due to China’s inclusion in the MSCI EM Index. Now, repeat after me, slowly if necessary… “Passive is what an index tracking fund does, actively choosing which fund to invest in is what the investor does.” If you don’t want China, select another fund. No choice, my bottom!
Spy’s band of trusty photographers have spotted some new advertising near Marina Bay Financial centre in Singapore. Franklin Templeton is asking us to rethink emerging markets.
One of Spy’s alert readers shared this advert that was served up to them as they were browsing a consumer website. DBS is pushing its DPM team. Yes, discretionary will grow in time. Spy is sure of it.
Until next week…
