The firm’s net profit rose 123.7% to HK$513.4m ($66m) from HK$229.5m in 2018, driven by strong fund performance and investment gains, according to a statement from the firm.
“For the fund performance part, in 2019, multiple funds in our firm achieved their high-water mark. For example, our flagship Value Partners Classic Fund rose 32.4% while the Value Partners High-Dividend Stocks Fund also hit its high-water mark, gaining 14.9%,” a spokeswoman for the firm told FSA.
“In terms of investment gains, we have invested in our own funds and the major contributors to profit are equities,” she added.
AUM remained stable at $15bn as of the end of 2019, with flows contributed by its core fixed income fund and China business segment, the statement noted.
The flat AUM stemmed from “major redemptions” of approximately $2bn during the second half of last year, though the spokeswoman declined to provide more details.
Speaking about China business, the firm said 2019 “ushered a new chapter for China’s capital markets as policymakers announced further measures to broaden the financial sector.
“Our business in the Chinese mainland continues to grow significantly as the [mainland] AUM rose 60% in 2019 to finish at $1.7bn.”
The spokeswoman told FSA that “institutional business contributes approximately 90% of our China AUM. We provide investment advisory on institutional in-house money. Other key growth factors include the private fund management (PFM) and MRF business”.
The firm manages eight onshore funds in mainland China via PFM channel which enables foreign entities to develop and sell funds investing in onshore assets to domestic qualified investors, including institutional and high net worth individuals.
Fixed income products
Fixed income has grown significantly as an asset class for Value Partners, accounting for 44% of the group’s total AUM, which is up from 5% in 2012, when the firm’s first fixed income product, the Value Partners Greater China High Yield Income Fund, was launched, according to the statement.
In 2019, the firm introduced six products, including three fixed income-focused products. They include a fixed maturity bond fund, the Asian Fixed Maturity Bond Fund 2022 and a Greater China Ucits high yield bond fund.
Value Partners had the tailwind of a strong overall fixed income market last year. There were $24.04bn of net inflows into Securities and Futures Commission (SFC)-authorised funds investing in fixed income securities in 2019, as investors either sought safety in investment grade bonds or clambered for income from high yield bonds.
All categories of fixed income funds enjoyed net purchases, notably global funds, which attracted net inflows of $15.68bn and Asia bond funds which gathered net inflows of $5.32bn, FSA previously reported.
2020 buying opportunity?
“Looking ahead, financial markets are set to weather risks for 2020, which could stem from geopolitical tussles, trade or diseases,” the firm said in an oblique reference to the coronavirus epidemic.
“However, Value Partners believes a distressed scenario has been priced into several countries, including China, which lays the ground for recovery and a buying opportunity”.
Separately, the firm intends to expand business in Malaysia, where it aims to launch Shariah-compliant funds and Southeast Asia-focused ETFs, the statement noted.
