AsianInvestor last night named Goldman Sachs Asset Management as Manager of the Year, and Man as Manager of the Year – Alternative Investments. The top honours were announced at our 10th annual dinner celebrating the magazine’s Investment Performance Awards.
As previously announced, the National Council for Social Security Fund was named Institutional Investor of the Year. Three distributors were also recognised: HSBC for commercial banking, UBS Wealth Management for private banking and AIA for insurance companies.
Manager of the Year: Goldman Sachs Asset Management
Goldman Sachs is transforming itself into a major competitor in asset management. Most of its profits come from trading, and as it does not have a bank, its only source of fee income is asset management. The importance of growing this type of business has become more clear with the financial crisis.
The firm has responded with a build-up in its capabilities that is focused on Asia. One important symbol is the naming of Jim O’Neill, coiner of the term ‘Bric’, as chairman of the asset-management business. In Japan, Daisuke Toki has been elevated to a vice-chair role, and regionally Oliver Bolitho has overseen a big expansion of the team.
In terms of local capabilities, the firm has taken steps towards developing local product expertise in India, Korea and Malaysia, among other markets. These local units have all demonstrated strong investment performance and were candidates for our onshore awards. Goldman has also made big moves into the sub-advisory market.
Perhaps most importantly, it is bringing a clear vision of investment ideas to both Asian and global clients in terms of how to best take advantage of growth opportunities in emerging markets, when there is no obvious benchmark or liquid solution. The conversations we have had with the firm about how to invest in the post-crisis environment have been very far-reaching and sophisticated.
In practical terms, it is exemplified by its North Asia strategy of integrating investments and solutions between Japan, China and Korea, which the firm is doing in a way we haven’t seen elsewhere.
Goldman’s short-term strength can be its ties to the investment bank; for example, many of its new executives have a securities background. This can also be a disadvantage, as investment banks are notorious for piling into a sector when times are good, and abandoning it when times are bad. That won’t work in asset management. Yet the firm’s commitment seems durable. The world has changed and GSAM is showing it is trying to get ahead of that change, rather than get sucked in its wake. This is leading to innovation that should serve its clients well.
Manager of the Year – Alternative Investments: Man
Headed globally by Peter Clarke, Man is led in Asia by Tim Rainsford and the firm now has approximately 1,600 employees worldwide. Managing $69 billion, Man is today rated the world’s largest hedge fund manager in terms of AUM. That follows the acquisition of multi-strategy hedge fund GLG in 2010, a hedge-fund giant founded in 1995 by Noam Gottesman, Pierre Lagrange and Jonathan Green. The combination marries active asset management with the more directional quant CTA strategies of its famed Man AHL fund.
Man has a range of liquid investment styles including managed futures (conducted through the blockbuster Man AHL), equity, credit and convertibles, emerging markets, global macro and multi-manager products. It has become a leading force across the spectrum of alternative investments and is a major player in Asia.
Institutional Investor of the Year: National Council for Social Security Fund
AsianInvestor canvassed the institutional asset community for several months for feedback about the development of the region’s institutional investors. We considered organisations from many markets, of different sizes, and with different investment objectives. But time and again the discussion returned to a handful of names.
The National Council for Social Security Fund (NCSSF) has performed well. Although total returns slowed in 2010 to under 5%, after achieving 16% in 2009, it vastly outperformed domestic equities; at any rate, 2009 was an unusual year of sharp recoveries. For a fund of its size, now Rmb857 billion, this performance is good. NCSSF's initial forays into private equity and international securities seem to be especially strong.
This award is about recognising an organisation that is not only successful in meeting its targets, but is raising standards for the region. The NCSSF has been repeatedly cited for having created a professional, thoughtful investment organisation and process, in a short period of time. This is, of course, why its returns on investment have fared so well.
One anecdote that struck us was from a manager whose firm made a bid for an international mandate from NCSSF, but lost. Nonetheless, the NCSSF came back and explained in patient detail exactly why. This kind of communication back to fund managers, even those who don’t end up working for the organisation, shows the extent to which the operations and investment process is understood.
It also demonstrates a degree of mutual respect that is not always shared among state-linked investors, but is appreciated by the industry and will make fund managers and service providers ready to go the extra distance for a client. Other investors should take note of the NCSSF’s diligence and professionalism.
Commercial bank distributor: HSBC
In May 2010, HSBC launched its FundMax platform in Hong Kong. The jury is out on whether this will be a success. The bank says it accounted for 30% of gross unit-trust sales from May to December. Some fund executives are sceptical that it will catch on. Let’s hope it does.
FundMax represents the boldest attempt by a distributor in Asia to try to change the contours of the game. Instead of relying solely on high up-front fees that encourage product pushing and ‘flavour of the month’ type sales, HSBC is trying to create an environment based around advice and long-term investments.
This platform allows Hong Kong investors free switching and unlimited unit-trust transactions, within a fairly broad pool of approved products, and with some degree of advice from the bank. In return they pay a flat fee.
If this is a success, HSBC may try to roll out this platform in other markets. China is making opening moves to allow foreign distributors to compete in its funds industry, and it would be a breath of fresh air to see something like FundMax enter that market. It would certainly benefit investors.
Private bank distributor: UBS Wealth Management
Fund managers have seen a big turnaround in UBS. The bank attracted SFr22.3 billion ($25.4 billion) in new assets globally in the first quarter. Its wealth management unit accounts for more than half, of which Asia-Pacific makes up the biggest chunk after Switzerland.
UBS has an unparalleled product platform in terms of depth and reach in the region. It has cross-border booking centres in Hong Kong and Singapore and domestic platforms as well in Japan, Taiwan, Australia, China and India to accommodate the local regulatory environments. UBS established an investment products and services (IPS) unit at the start of last year to give clients direct access to its entire range of products and services.
It transferred head of investment advisory Alexander Kobler from Switzerland to Hong Kong in September to run the unit in Asia-Pacific, and it hired Philip Kunz from HSBC Private Bank in November to drive growth in Southeast Asia. In short, the bank is back.
Insurance company distributor: AIA
Despite the distractions and turmoil that could have sunk a lesser organisation, AIA has emerged from the global financial crisis with its regional leadership intact.
Indeed, many fund houses have become more reliant on the insurance channel in the past two years, as banks have pulled away from selling investment funds. AIA has been a lifesaver. Its top-quality agency salesforce has continued to expand unit-linked investment products around the region. This salesforce is not just big; it is also knowledgeable and well trained. It reflects the firm’s ongoing culture as a player in it for the long haul, not the quick buck.
AIA triumphed as a group in 2010 by rebuffing Prudential’s takeover attempt and then raising $20 billion in an IPO in Hong Kong. It is becoming an ever more vital part of the distribution story throughout the region.