Brandywine Global, part of US fund group Legg Mason, has hired a new chief executive for Asia ex-Japan, who plans to strengthen the firm’s coverage of tier-two institutions, Southeast Asian markets and bank distribution channels.
Tariq Ahmad spoke to AsianInvestor yesterday in his first interview since taking the role on January 3. He was previously Singapore CEO and head of business development for Asia Pacific and the Middle East at rival fund manager Rogge Global Partners.
Ahmad replaces John Tsao, who has been with Brandywine since he set up the Singapore office in 2003. Tsao will remain with the firm, but with a greater focus on investment research. Ahmad will oversee regional business development and client servicing, while Tsao’s new title is yet to be decided.
Brandywine has a strong footprint in key markets in Asia – notably in North Asia – and with the bigger institutions, noted Ahmad, but is looking to expand its presence in Southeast Asia and among smaller, second-tier clients.
He said he would be looking to build traction with official institutions and pension plans and in countries such as Indonesia, Malaysia and Thailand. In addition, noted Ahmad, the firm aims to tap insurance firm’s “growing demand for specialist mandates”.
Brandywine has about $70 billion under management globally, of which $16.4 billion is sourced from clients in Asia Pacific, including $7 billion from Japan. At present all the Asia AUM is in global fixed income strategies and mostly with institutional clients.
The firm also has about $15 billion globally in equity strategies, and is considering building out a multi-asset offering at some point, although this is not a focus currently, said Ahmad. It currently offers balanced multi-asset strategies.
Meanwhile, Brandywine also plans to increase its sales of Ucits products in Asia through channels such as retail and private banks, he noted. To do this, it will make use of Legg Mason’s distribution network and resources in markets like Hong Kong, Singapore and Taiwan.
The firm’s regional Ucits sales are “not significant”, said Ahmad, and developing that part of the business “will be a strong focus”. Brandywine has $6 billion of AUM in Ucits products globally.
As for plans to recruit more staff, Brandywine will add a client-servicing specialist to its five-strong team in Singapore over the next three months. It is also considering hiring a dedicated salesperson for South Korea.
Ahmad covers that market out of Singapore, but he said the firm may put someone in Legg Mason’s Hong Kong office to strengthen its coverage. This would reflect the plan to hire native speakers for certain markets to increase its focus on tier-two institutions.
Brandywine has a portfolio manager and a research economist in Singapore, both focused on Asian sovereign and corporate debt, and a business development executive supporting Ahmad.
Asked whether Brandywine has any plans to set up an onshore presence in China, Ahmad said it was looking at what it could do to help Legg Mason establish a mainland presence. “We’re looking at the different structures we can use to be onshore,” he said.
Brandywine does not yet invest in the onshore renminbi bond market, but he said it was following the market closely to see how it develops.
Active asset managers are under growing pressure to provide alpha for the fees they charge, given the growth of passive, index-related strategies. How is Brandywine responding in Asia?
“The industry is definitely polarising,” noted Ahmad. “Mid-tier firms are getting acquired, and what’s remaining are the very strong big firms and the boutiques. The larger players will move more into manufacturing passive funds [as part of their business], while the boutiques will remain focused on active management.”
Brandywine’s proposition – seeking alpha through unconstrained fixed income strategies – is therefore more important than ever, he noted, given how low bond yields are. But Ahmad said the firm was not being pressured by clients to reduce fees: “We’re not having such discussions at this point.”
However, a major trend he is seeing among institutional investors in Asia is the larger players steadily building their internal capabilities and shifting more strategies in-house.
They are therefore using fewer asset managers, and only the standout performers offering something different will remain on their platforms, said Ahmad. “When they need beta management they can do it in-house more and more, but when they need alpha, they will look externally.”