Last night AsianInvestor held its celebration dinner for its 13th annual Investment Performance Awards. Today we’d like to explain our thinking behind a few of the marquee awards, which we believe serve as a reflection of the key industry trends last year. (All the winners have a write-up in the June edition of the magazine.)
The big buyside awards went to BlackRock, JP Morgan Asset Management, GF Fund Management, Goldman Sachs Asset Management, Value Partners and JP Morgan Asset Management.
These awards were a judgment call by our journalists. We sought to look beyond the confines of asset classes or country expertise, in order to understand the bigger trends driving the industry. The global financial crisis has changed this business and we wanted to be sure our awards reflected that.
BlackRock (Best investor education programme)
Investor education is a marketer’s dream: easy to talk up without the need to provide concrete information. What differentiated BlackRock’s pitch was not only genuine progress across delivery platforms, but quantifiable evidence of business impact. The firm has been striving to give its website a common identity and infrastructure globally, with first-class educational fund pages. Last year it launched new microsites to raise content engagement for both ETFs and mutual funds, recording more than 1.4 million website visits and 64,000 downloads of educational material in Hong Kong alone, a three-fold increase on 2012. It delivered more than 714,000 client communications – including white papers, tailored investor e-newsletters, online videos and mobile content – with an average click-through rate of 35%, a 10 percentage-point increase year-on-year. This is demonstrable progress. Last December it launched an animated Youtube video about its global equity income fund, which by the end of the year had 68,000 views. This has since risen to 340,000. As a first, BlackRock launched its inaugural Asia Wealth Symposium, bringing together more than 200 executives including distributors, gatekeepers and CIOs, as well as institutional and retail investors. It was one of the 150 events the firm held across Asia last year. It also conducted its first Global Investor Pulse survey in Hong Kong, Taiwan and Australia to educate distributors on investor needs and behaviour. BlackRock fought off strong competition from the likes of Franklin Templeton for this award, demonstrable reward for an excellent year.
JP Morgan Asset Management (Best Business Development)
Globally JP Morgan Asset Management dominated fund flows last year with $61 billion in net new money, more than twice that of second-placed BlackRock and Dimensional Fund Advisors. It was a similar story in Asia Pacific, where the US fund house smashed its internal records for AUM, revenue and gross and net flows. Overall it received $15.6 billion in net flows last year in the region, almost tripling its 2012 figure. Its AUM increased 16% to $133 billion, which represents over 8% of its $1.6 trillion in global assets. Income and multi-asset products were among the key drivers, with flows into multi-asset in particular up 43% in Hong Kong, 40% in Singapore and 74% in Taiwan. The Asia equity dividend fund that it launched in the second quarter of last year attracted $398 million in gross flows. In Singapore it doubled its AUM to $1.6 billion, onboarding the three largest local distributors. In China its joint-venture, China International Fund Management, ranked number one in net flows ex-IPOs. It also obtained a fund distribution licence from the CSRC, enabling it to distribute domestic funds in China, and became one of the first international managers to receive an RQFII licence. In Hong Kong it doubled record net sales to $4.7 billion. It made progress in Japan, garnering $800 million for its Japan Meister Fund through bank trusts. And in Korea JP Morgan AM raised $400 million for its US short-duration high-yield bond strategy, picking up an AsianInvestor award for that market in the process. It now boasts a 12% market share for overseas fixed income there. While it launched its Australia business in the first quarter of this year, it seeded the funds and made the business plan in 2013. It also launched the first actively managed QFII fund in Taiwan. JP Morgan AM’s business development across the region in 2013 made this award a simple decision.
GF Fund Management (Retail Product of the Year)
Chinese investor interest in overseas equities has been tepid since the global financial crisis, which ruined early enthusiasm in the Qualified Domestic Institutional Investor (QDII) scheme. But their need to diversify from the volatile A-share market is strong, and the only way to reignite interest is to deliver track record. That is what GF Fund Management is doing through its Asia Pacific ex-Japan selective fund. This long-only fund delivered a 43.43% return in 2013 after fees, the best performing of 101 QDII funds (including equity and debt), beating its MSCI benchmark by almost 43%. That is against an average QDII return of 5.1%. Lead portfolio manager Tom Ding set about repositioning the fund when he took over the portfolio in April 2012. He cut exposure to all Asian markets except Hong Kong, and maintained several leading global firms. It overweights TMT, health-care, new energy and consumer stocks, focusing on the transition of China’s economy from investment-driven growth to one supported by consumers and technology. Its top holdings by year-end included Tencent, CR Gas and Wells Fargo. Overall the fund increased AUM by 68% last year to Rmb239 million ($39 million), evidence that it is building a bridge for Chinese investors to march overseas with confidence, which will be increasingly important as fund passporting gathers steam. Further change is on the way as the fund is set for another makeover next year, but it appears Ding is the man to do it.
Goldman Sachs Asset Management (Institutional Solutions Provider of the Year)
At a time when Asian institutional investors were busy looking to boost their exposure to alternatives asset classes, Goldman Sachs Asset Management showed off its depth and breadth of expertise and relationships on this front in 2013. The fund house won mandates – from new and existing clients – across the alternatives spectrum, from hedge strategies to private equity to commodities, as well as in traditional investments and multi-asset class solutions. Several of the region’s biggest institutions – including central banks, sovereign wealth funds in North and South Asia, superannuation funds in Australia and insurers – made substantial new and top-up investments (each to the tune of several hundred million dollars). GSAM also saw notable flows from insurers in Asia last year, a traditional area of strength for the firm. This reflected strong mandate performance and a high level of confidence in GSAM’s capabilities among those asset owners – cementing already strong relationships. Indeed, the asset manager is believed to be among a relatively small number to have several strategic partnerships across the region with large entities seeking advice on a regular basis. All this was reinforced by very positive comments from clients contacted by AsianInvestor. One big institution singled out GSAM for particular praise for the strength of its research on and connections with hedge fund managers. The firm further highlighted its capabilities in this area with the US launch last year of the Goldman Sachs Multi-Manager Alternatives Fund. The mutual fund, which allocates to liquid strategies, has raised $367 million as of March 31, gaining strong traction among Asian institutions. Since inception of the Fund on April 30, 2013 to March 31, the fund has returned 5.81%, as against the HFRX Global Hedge Fund Index return of 3.98%.
Value Partners (Asian Fund House of the Year)
More than $1.3 billion in net inflows from retail and institutional investors in Asia and beyond last year was a strong vote of confidence in Value Partners. This drove the firm to a telling milestone: it became the first home-grown manager in Hong Kong to manage more than $10 billion in assets. The firm increased AUM 23% last year to $10.5 billion. Performance has been the key, with its product range consistently outperforming their benchmarks. The private banking channel proved a key driver of flows last year, with the firm strengthening partnerships with existing banks and establishing new ones. Value Partners moved to enhance its product range and introduce multi-currency FX hedging and dividend distribution classes for several products. It put a chunk of its fresh $100 million QFII quota to work by launching an A-share fund in March, and also won its first advisory mandate from ICBC. It also attracted institutional money from organisations in the US, and started to manage a closed-end Asia-Pacific equity fund listed and sold in the US that had been managed by another firm for 17 years. These were significant scores in the extremely competitive world of Asian equity management. In October 2013 Value Partners was granted an Rmb800 million RQFII quota, and is now busily developing a product series. It launched its first balanced fund in Taiwan via its joint venture, and introduced a Greater China equity fund there – boosting AUM of its Taiwan business to $50 million. The firm strengthened its cooperation with mainland bank distributors, launching a QDII equity fund (mainly H-shares) in partnership with China Merchants Bank in February and raising Rmb209 million. Importantly this will help domestic investors to diversify. Further, Value Partners opened a new office in Beijing last May and started the process of setting up a branch in Singapore. The firm’s progress has been tangible and wide-ranging across products and geographies, as an Asia fund house adapting to prevailing market dynamics while building for the future.
JP Morgan Asset Management (Asset Manager of the Year)
The growth of JP Morgan’s asset management business across Asia Pacific has been nothing short of phenomenal. On both the retail side, primarily through its flagship multi-asset income products, and the institutional side, the firm smashed internal records last year. Its performance has been solid and consistent, with 241 of its more than 800 mutual funds globally holding four or five-star rankings. In Asia, 92% of AUM for its Pacific Regional Group – its primary investment team in Asia – was above benchmark on a net basis for 2013. Its fundraising success points to strength in product design in response to market trends. Combine that with regional advances in countries such as Japan and Australia, its industry-leading educational initiatives led by Guide to the Markets and milestones such as the bank’s receipt of a fund distribution licence in the region’s most promising market, China, and the dynamism of the firm’s growth in Asia is hard to overlook. Moreover, it is keeping its key staff, retaining 95% of its senior portfolio managers last year. On the institutional side, the firm saw $10 billion in gross inflows and won 20 new clients. Some of the bigger central banks were among those handing new or top-up mandates to the firm, with global tactical multi-asset portfolios proving particularly popular. In China, its joint venture – China International Fund Management – saw its A-share equity funds rank first among the 15 largest firms. In Hong Kong, JP Morgan AM was among the first global houses to receive an RQFII licence. In Singapore it achieved approved fund management status from the Central Provident Fund, and in Taiwan it introduced the first active A-share equity fund locally. Competition for this award was intense, with KKR in particular pressing a strong claim after closing its Asian II Fund at a $6 billion hard cap – the largest in Asia and the fastest fundraising of its size, combined with a string of proprietary investments and successful exits. But the diversity of JP Morgan AM’s revenue streams and milestones achieved during the year gave it the edge.