Baillie Gifford opens in HK, sets out strategy

AsianInvestor hears from David Henderson, partner at the Scottish fund house, about the reasons for the move, hiring plans for the region and why the firm chose Hong Kong.
Baillie Gifford opens in HK, sets out strategy

Baillie Gifford, a Scottish investment management firm, has set up a marketing office in Hong Kong, its first in Asia, and is busy staffing up. This is the continuation of an already well-established business.

David Henderson, Edinburgh-based partner and chief executive of Baillie Gifford Asia (Hong Kong), explained to AsianInvestor the motivation for establishing a local presence and outlined the firm’s plans.

Angus Macdonald has relocated from Edinburgh to head the operational side of the new office. He was previously head of group legal and will be replaced by Alastair Maclean, who joined the firm on January 4.

In addition, Rita Xiao has joined from Hong Kong pension advisory firm Stirling Finance. She had been providing Baillie Gifford with information about the Chinese pensions market for several years.

By the start of April the firm will have four employees in Hong Kong. Macdonald and Xiao will be joined by a senior marketer in April and an office administrator in March.

They will add to the existing eight-strong team covering Asian clients out of Edinburgh; the firm has been serving clients in the region since 1989.

The decision was taken to set up an office now for a number of reasons, Henderson told AsianInvestor. Firstly, some of the firm’s existing clients wanted it to have an Asian presence.

Secondly, Baillie Gifford had become aware of an increasing number of Asian institutions allocating more overseas, into the sort of strategies that the manager provides. “We believe that diversifying our business is healthy and would like to get to know these institutions better,” said Henderson.

Another factor was a desire to develop the firm’s understanding of doing business in Asia from a compliance and legal perspective and to stay on top of the regulatory environment.

The firm already sources around $15 billion of its £123 billion ($175 billion) in AUM from Asian clients, the vast majority of which comes from pension fund clients, and some via distributors.

The main focus will continue to be large institutional investors, said Henderson, but the firm also expects to work with local distributors. Indeed, its first Asian client was Japan’s Mitsubishi UFJ Trust & Banking, a relationship that dates back to 1989.

So why set up in Hong Kong rather than Singapore?

It was a close call, noted Henderson. An important factor was proximity to China, as well as access to Chinese institutional investors with subsidiaries in Hong Kong, given the growth of opportunities there. “Ultimately, we expect that we will need more than one office in Asia,” he added. “Singapore may well be next.”

Asked about products he expects to distribute in the region, Henderson said: “We expect to sell strategies we have already been selling in Asia. We are best known for our actively managed, growth-oriented equity strategies, but we also have fixed income and multi-asset capabilities. We know that many of these strategies appeal to Asian investors.”

The firm does not currently have plans to register or domicile funds in Hong Kong, he added, “but we are keeping an open mind, particularly given the ongoing fund passport developments”.

The most high-profile initiative is the China-Hong Kong mutual recognition of funds of funds scheme, which launched late last year, but there are also other schemes developing, including the Asean initiative and the Asia Region Funds Passport.  

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