Asia Pacific's family offices are a nimble bunch and never more so than when it comes to ESG where they're already proving to be ahead of the regulators.
Goldman buys minority investments in alternative research firms. It provides capital and distribution, for which Goldman receives a cut for distribution as well as the benefits of its stake. Hudson Street is coming to Asia to sell US-based research products to Asian investment managers, but says it also plans to bring an Asian research firm on to the platform soon. Suresh Suppiah will act as the liaison point in Asia, based in Hong Kong.
Some of the research firms currently distributed through the platform include Medley Global Advisors which provides macro/policy intelligence and analysis, and iSuppli, a provider of electronics supply chain research and advisory services. The individual services fluctuate in price from $35,000 to $400,000 per year.
How a hedge fund accounts for information depends on the agreement between the fund and the manager û some allow for research expenses to be billed to the fund rather than coming out of the management fee. As an alternative, managers might try to negotiate soft dollars to pay for third-party research.
Looking at the list of research services on offer, what does the Street say?
ôIt has been terrific for us. It's unconstrained research content, containing no pressure from a broker that may be influenced by IB initiativesö says Mark Kuzminskas from Boston Partners. ôFor the providers it is a low cost option because they donÆt have the constraints of having to run a full service platform. If it wasnÆt for the likes of Hudson Street these providers wouldnÆt have a way of distributing research to firms like ourselves.ö
But keep your champagne on ice, Goldman Sachs. YouÆve still got some marketing and persuasion to do here in Asia. Some Asian hedge fund managers are very tough nuts to crack when it comes to parting with their hard-earned dollars for research (and definitely when it comes to forking out for champagne).
ôIf this stuff is so cutting edge what does it say about Goldman's regular research?ö says a hedge fund manager which uses Goldman Sachs as its Asian prime broker. ôTo be honest even if the services were free I don't think I would find any of them worth it for what we do.ö
Now, it is understandable that users can come over Luddite when new-fangled inventions pop up. AsianInvestor asked Goldman Sachs about these objections, and this is what Tom Conigliaro, a managing director in Goldman SachsÆ equities division and head of Hudson Street Services had to say:
If these services are so great, why use GoldmanÆs own research?
Conigliaro: These tools and research content available on Hudson Street Services are separate from but complementary to Goldman Sachs' fundamental research product. None of the research providers on the platform provide fundamental (ratings driven) research that could be comparable to Goldman Sachs' research. Goldman Sachs makes minority investments in the companies to participate in their growth.
Are these services really useful in Asia?
All the existing partners on Hudson Street Services have content/tools relevant to Asia. For example, iSuppli provides advisory services on the electronic value chain, targeting the top electronic companies in the world, many based in Asia. Lusight focuses exclusively on emerging markets, especially frontier markets. Medley Global Advisors provides analysis of monetary, fiscal and currency policies of key economies, including many in Asia. TrimTabs provides detailed real time coverage and analysis of US and international equity market liquidity, covering Asian markets including Japan, Hong Kong and China. Connotate and Investars are technology platform that are market agnostic. Asset 4, which provides financial and extra-financial information (such as that on a company's environmental policy, board independence), will begin covering the MSCI World index by year-end.
Investors are bringing an ESG focus to opportunities, while being aware that this does not mean an automatic boost to returns.
When it comes to scale and diversity, the China market is now second to none. Investors, however, need to take a long view on a sometimes volatile market, experts from the likes of GIC said.
The age of Asia will soon arrive as the world is shifting towards multipolarity. What are the key trends that investors and business leaders should be aware of?
The two Apac sovereign funds are focusing on renewable and clean energy infrastructure assets as part of their fine-tuned investment strategies.