The largest retirement funds in the Netherlands and South Korea have formed a landmark partnership to focus on real asset mega-deals. Their investment heads tell AsianInvestor why.
Beijing-based CreditEase, a peer-to-peer (P2P) lending platform and wealth management platform, has been busy building its roster of mutual fund, trust and insurance products and expanding its overseas business.
In an exclusive interview, CreditEase’s head of wealth management products, Hou Lin, explained its evolving investment relationship with clients and outlined its asset allocation outlook for 2018.
CreditEase focuses on offering high-net-worth individuals (HNWIs) ways to invest into alternative investments. More than half of the almost Rmb100 billion ($15 billion) it had in new assets under management in 2017 was invested into funds of funds (FoFs) of venture capital (VC), private equity (PE), real estate and hedge funds.
“Overall, we recommend that clients shift more to equity investments from fixed income, and to make more allocations into FoFs and alternative asset classes,” Hou told AsianInvestor.
The wealth manager’s asset allocation suggestions for this year is to put about 30% in fixed income, 20% to 30% in VC/PE, 20% in hedge funds and capital markets, 20% in real estate, 5% to 10% in long-term insurance products, and 5% in overseas private credit.
CreditEase’s FoFs invest in three main categories – PE/VC, real estate and capital markets – with a series of flagship FoFs denominated in renminbi and US dollar respectively, under each category.
“We would normally have a maximum of 10 FoFs active at the same time, which is quite simple for clients to choose from,” added Hou.
The investment horizon for VC/PE and real estate FoFs is 10 to 12 years, while for property-income and capital market FoFs it is typically three years, she said.
Hou also explained the three-step investment engagement process it employs when dealing with investors: At the first level, it offers recommendations to clients to invest into FoFs, with an investment threshold of about Rmb2 million to Rmb3 million, she said.
“Later, we provide single private funds from managers that we have consistent partnerships with, believe are very stable in [terms of] performance and have long track records. The threshold of investment for a single fund would be higher at Rmb3 million or Rmb5 million."
She said the wealth manager is quite selective about single funds: “There are not many in number but they have very consistent provisions.”
CreditEase’s fund partners include overseas managers such as Tishman Speyer, Wellington, Oaktree Capital, and domestic managers such as IDG and China Growth Capital.
Finally, after investing in FoFs and single funds, some HNW clients are willing and can afford to invest in specific projects directly with the asset manager … which can bring a higher return with higher risk. “For example, we have partnerships with IDG, Tishman Speyer and others for all three of the above steps,” said Hou.
In addition, CreditEase is eyeing new areas of investments, Hou said: “We would like to try putting small initial amounts into some niche alternative investments, such as infrastructure and catastrophe insurance."
This piece is adapated from an interview that first appeared in AsianInvestor's February/March print edition. Hou also discussed how CreditEase chooses fund managers.
After pouring nearly $15 billion into European property in the 15 months to March, Korean investors are apparently being put off such assets by relatively high prices and lower returns.
Aberdeen Standard Investments' head of Asia Pacific on how crises and consolidation have affected the investment industry and why his firm first chose Singapore as its regional base.
The Chinese government will next week discuss its economic and social development plan for 2021 to 2025 against a volatile global backdrop. Investment experts are mulling potential outcomes.
The US fund manager has recruited a sales head in Hong Kong from alternatives house Oaktree with a view to building a team and expanding its institutional client base in the region.