Following an RFP involving around 10 firms, Hong Kong's Hospital Authority Provident Fund Scheme awarded its first ever Hong Kong dollar bond mandate to MFC Global Investment Management, part of Canadian insurance group Manulife.
Heman Wong, executive director of the $4.76 billion retirement fund, says a few of the 10 were short-listed for the final round of selection, but declined to reveal names for confidentiality reasons.
As for why the institution put out the HK$682 million ($88 million) mandate, Wong tells AsianInvestor: "We have decided to invest some of the cash held by one of our member choice funds into short-term HK dollar bonds." The mandate has no set duration, he adds, and there are no others planned at present.
MFC GIM's HK dollar bond team, led by investment manager Paula Chan and supported by Ronald Chan, will manage the mandate as a segregated account.
Asked whether he feels it's more likely the Hong Kong dollar will be depegged from the US dollar following China's signalling it would depeg the renminbi, Wong says he believes Hong Kong's peg will remain in place.
Wong adds that the Hospital Authority has not made any changes to its asset allocation following recent events such as sovereign debt issues in Europe and renminbi depegging. "As a pension, we set our strategic asset allocation on a medium- to long-term basis," he says. "The Hospital Authority Pension Fund Scheme does not employ tactical asset allocation at the moment, apart from currency overlay.
"We are quite diversified and as a result we have a very small exposure to debt issues in the Pigs [Portugal, Ireland, Greece and Spain]," adds Wong. "Our fund managers have the flexibility to actively manage that exposure."
Avere Hill, Asia-Pacific head of institutional business at MFC GIM in Hong Kong, says the asset manager's track record was probably one of the primary reasons the Hospital Authority hired MFC. "They were looking for scale, experience and good risk management," he tells AsianInvestor.
"We manage about $40 billion in Hong Kong dollar fixed-income assets and we're a major MPF [Mandatory Provident Fund] player, with $13 billion in fixed-income short- and medium-term strategies," he says, adding that this is the first time MFC has worked with the Hospital Authority.
Elsewhere in the region, MFC GIM has picked up several mandates this year, says Hill, including a couple of institutional mandates in Japan for its Timberland product, several Indonesian fixed-income mandates, and a Vietnamese equity portfolio. The manager is also close to inking a number of deals in Hong Kong, he adds.