Hong Kong-headquartered Value Partners’s assets under management (AUM) have recovered after they fell 21% during the first half last year.
As of the end of 2020, Value Partners’s AUM stood at $14.17bn, which is 20% higher compared to $11.8bn in June, according to the firm’s 2020 annual results.
However, overall assets are still 5% lower compared to the AUM of $15.01bn in 2019.
The lower AUM was attributed to net redemptions for the full year 2020, according to a spokeswoman of the firm. While gross subscriptions totalled $4.6bn, gross redemptions were at $6.9bn.
“In our view, redemptions were a result of market frustrations when the global public health crisis kicked in, rather than anything performance relations,” the spokeswoman said.
Strong returns from the firm’s mutual funds helped offset net outflows during the year. Around 13% or $1.8bn of the firm’s assets came from the positive performance of the firm’s products, according to the report.
Thirty of the firm’s funds surpassed their respective high-water markets, the spokeswoman said. For example, its flagship product, the Value Partners Classic Fund, returned 37.6% compared with the -0.29% performance of its benchmark (Hang Seng Index) in 2020, while the Chinese Mainland Focus Fund had returns of 73.5% against the MSCI China Index’s performance of 28.27%.
The funds’ strong performance also drove the firm’s profits. Gross performance fees, which amounted to HK$1.47bn ($190m) versus HK$44.3m in 2019, were the major source of the firm’s revenues in 2020. Overall, net profit was at HK$1.38bn in 2020, up by 160% from HK$513.4m in the previous year.
DIVERSIFYING AUM
Separately, the firm noted in its annual report that AUM sourced from outside of its home market has grown.
The share of assets sourced from European clients grew the largest and now accounts for 10% of the firm’s AUM compared to 3% in 2019.
AUM contribution by geographical region
| 2020 | 2019 | |
| Hong Kong SAR | 64% | 71% |
| Mainland China | 10% | 11% |
| Europe | 10% | 3% |
| Singapore | 6% | 8% |
| United States | 4% | 3% |
| Japan | 3% | 1% |
| Others | 3% | 3% |
“While expanding our role as a domestic fund manager on the mainland, we continue to market our services to overseas investors wishing to use our China expertise,” Cheah Cheng Hye, co-chairman and co-chief investment officer at Value Partners, said in the report.
“A milestone was achieved in 2020 when a major British financial institution, M&G, awarded a huge mandate to Value Partners to manage a portfolio of Chinese equities,” he said. The mandate size was at GBP 500m ($684m) and was awarded to Value Partners after M&G conducted a global search of a qualified manager, Cheah added.
Meanwhile, mainland China continues to be a huge part of the firm’s business, representing 10% or $1.4bn of the firm’s AUM, according to the report. In China, the firm targets three segments, including institutional clients, private fund management (PFM) mandates and retail investors via the Mutual Recognition of Funds (MRF) scheme.
