Baring Asset Management looks likely to launch an Asian fixed income product in the near term, and is also seeking to create an Asian version of its London-based multi-asset proposition.
Only this April the firm announced it had hired its first head of Asian debt in the shape of Thomas Kwan from ICBC Credit Suisse in Beijing. He is based in Hong Kong.
Up until then Barings’ fixed income and currency coverage had been based out of London headed by Alan Wilde, with Thanasis Petronikolos as its head of emerging market debt and fixed income investment manager.
Asked over lunch whether Barings would be launching a fixed income product out of Hong Kong, Ian Pascal, its head of marketing and communications, responds: “No comment.”
It would be an obvious inference to draw, and would tie in with Barings’ drive into emerging-markets investment. In the past 18 months Barings has added two emerging market debt managers based out of London and Pascal confirms this is an area the company wants to grow.
“If you believe in the story for emerging markets and for Asia, it is a no-brainer that you would develop both the fixed income side and multi-asset side of the business,” he admits.
Barings took the decision to install a CIO in Asia last year and re-hired Wilfred Sit from Mirae Asset Global Investments. It came after the exit of its Asia-Pacific head of investments Henry Chan.
The firm has about 20 investment professionals based in Asia-Pacific out of about 65 staff in the region. The vast majority are focused on equities – including its new India equity manager Ajay Argal – but Kwan and quant analyst David Leung from HSBC both arrived this year.
“Some of the things we have traditionally done in London, we are building out in Hong Kong,” says Pascal. “The latest hires complete our recruitment in Asia for the moment. Building out our Asia debt capability is a longer-term project.”
Barings’ Asian multi-asset strategy is headed by Khiem Do and already boasts $100 million in Asia-sourced AUM. Pascal notes that Barings is eager to create a segregated Asian version of its multi-asset product sold out of London.
Its flagship Dynamic Asset Allocation Fund, currently $5.6 billion in size, seeks to deliver the long-term return on equities with less than equity market volatility.
“A lot of traditional institutions are very interested in this segregated product,” suggests Pascal, who confirms that Percival Stanion, head of asset allocation, is travelling to Hong Kong this month to meet potential clients.
“The life-cycle we have been through in the UK, which is our biggest multi-asset market, is institutional first. It appeals to small to mid-size pension funds which don’t have the [asset allocation] capabilities themselves. Then more recently it has gone into the retail side of things. We would expect the same sort of model here [in Asia].”
Barings’ multi-asset proposition in London evolved from old-fashioned balanced mandates. It now features broader asset class exposure, including gold and even shares in new aircraft being leased to airlines.
This July Barings launched another multi-asset product focused on emerging markets – the Baring Dynamic Emerging Markets Fund. The fund, which is not currently authorised for sale in Hong Kong, has $117 million under management.
“Initially we were approached by institutions to develop this product and so we did, in partnership with them. They were the initial investors in this product, and now we are getting into retail investors as well. There is a lot of interest in this out of Europe.”
He describes the operating environment in the UK and Europe as “horribly complex” and says many financial advisers are finding it very difficult to protect clients’ investments from markets.
It is one of the reasons he believes that interest in multi-asset products has grown, notably in the UK, while he notes that there is a lot more interest in emerging markets in Europe now.
“The growth in multi-asset products has helped us to weather this investment environment,” he admits. “We think there are some managers who will find it very difficult to operate because of their cost base and asset mix. We think we are well positioned to take market share.”
Barings has seen its global AUM drop around 5% this year to about $50 billion, over $10 billion of which is invested in Asia. The firm has physical presences in Japan, Taiwan, Hong Kong and, most recently Korea, where it appointed Ike Bae from Alliance Bernstein as head of sales this March.
It is building relationships with distributors in China out of its Hong Kong office, where it has a fund sales team of four. It expects to add a couple of sales staff in Korea in time and has a sales team of five in Taiwan.