Responsible investing includes allocating to poor-ESG performing EM countries and helping them shift to greener solutions, instead of divesting completely, experts said.
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.
Inflation, fluctuating interest rates, Covid-19 shutdowns, and sporadic reopenings have led to bouts of volatility in the market, with tech stocks bearing the brunt of the selling over the last month.
Amid today’s macro landscape and the need to rethink portfolio planning, asset owners in Asia Pacific are more eagerly embracing responsible investing, says Nuveen’s Simon England-Brammer.
Aware Super appoints deputy CIO and head of governance; AustralianSuper promotes chief risk officer to replace Paul Schroder; Raffles Family Office adds two new roles to independent advisory board; Amundi appoints South Asia CEO; Barclays names China chief executive; Zico hires head of advisory in Singapore; Capital Group names head of HK client group; and more
Nearly 50% of institutional investors and family offices in Asia Pacific intend to increase the number of external managers for their thematic investments in equities over the next 12 months.