Hugh Young is regional managing director of Aberdeen Asset Management Asia, group head of equities as well as a member of the executive committee responsible for Aberdeen's day-to-day running.
He co-founded Singapore-based Aberdeen Asia in 1992, having been recruited in 1985 to manage Asian equities from London. Aberdeen Asia employs more than 250 staff and has research/investment offices in Australia, China, Hong Kong, Korea, Japan, Malaysia, Singapore, Taiwan and Thailand, over which Young is in overall charge.
Young is part of the very select list of 25 most influential people in Asia asset management compiled by AsianInvestor. He spoke to AsianInvestor about his experience in building the business.
You co-founded the office in 1992. You've been in Asia for 17 years. Could you talk a little bit about your experience building the business?
Young: The whole process was slow -- we stuck to our guns, stuck to the basics of investing, and tried to build a foundation. On day one, we had three people here: me, Peter Hames and Evelyn Chi, who was the secretary then and now our regional office manager. We are all still here. We came to Asia to run our existing funds better.
How many fund managers did you have when you started in your first year?
None. The first person we hired was in February 1994 and he is still with us as well. Peter and I were doing all the investing in the first two years.
How many fund managers do you have in Asia now?
Around 50 fund managers. The staff count is pushing 300.
Were there a lot of international fund management companies that came out here in 1992?
Coming to Singapore in 1992 was quite rare. Singapore was not the destination of choice. It was perceived as overly regulated at that time. We perceived it to be not as illiberal as people thought.
Moving to Singapore reflects our investment style -- long-term plan, thoughtful, quiet. It doesn't have the short, sharp trading mentality that Hong Kong has in terms of investment and business climate. Hong Kong has more emotional mood swings. We only had Singapore and Hong Kong to choose from. Tokyo wasn't viable because there were too many variables. The hubs were clearly Hong Kong and Singapore. Singapore suited us better.
People in Singapore were afraid of a strong regulator. We actually prefer a strong and fierce regulator. Communications were another reason to be here.
Hong Kong had the old Kai Tak airport which was a pain in the neck. Changi was a major advantage, the English was a major advantage.
And also, Hong Kong was still British.
Wouldn't that have served you better?
We preferred to be in Asia as a guest, rather than thinking that we still ran it. That was in many ways to get away from the Jardine Johnny approach. That was quite an active decision as well. Long-term vision, communications, strong regulator those were part and parcel.
Who's running the business? Are you in charge of Singapore? Is it by design that the team is not hierarchical?
Yes, we don't segregate; we all get our hands dirty. I still see companies for example and deal with investments and Peter will see companies, deal with investments and in a way deal with any job that a new recruit would do.
What was your vision for the company?
It was really to start the business and focus on the investments.
What was the AUM is the first two years?
Around $150 million. Now it's $30 billion, down from $50 billion a year or so ago.
What is the AUM in terms of assets you have generated from Asian clients?
Including Australia, under 20% of the whole AUM is in Asian assets. That's fixed income and equities. The global AUM is about $200+ billion. So, around $6 billion is generated from Asian clients and invested in Asia.
Globally, how much money have you generated from Asian clients?
An extra $5 billion is invested outside Asia. So in total, around $11 billion.
How are you able to retain your staff?
We get them young and they grow with us. The job has always been very interesting.
The structure is flat. You get exposure to a lot of things. In the first week, you will be meeting with company management, sitting with seniors in the companies. You wouldn't be expected to say a lot but you will get tremendous exposure.
You are not just covering Singapore financial stocks, for example. There is lots of pencil pushing, jobs have become more bureaucratic by nature.
What is the average number of years of your staff in Asia?
We have maybe four graduates join us across the region over the last 12 months, and that pulls the average down. But at the senior level, many people have been 10 or more years with the company. In the core Singapore team, we have 14 people on the Asian equity team.
How many fixed income fund managers do you have now?
Three in Singapore.
Out of the more than 250 staff in Asia, how many are in Singapore?
About 140. The next biggest office is Sydney, before Credit Suisse, which has 40. Thailand has about 40 as well. Thailand does a lot more of its own back office. Our business model is typically to outsource, but in Thailand it's cheaper to do it ourselves.
Has the global financial crisis affected the way you manage your fund?
Not at all. World crisis or not, every day we learn more and that helps us make fewer mistakes in the future. The core rationale of what we invest hasn't changed at all: good companies run by professional people that hopefully we can buy as cheaply as possible.
We have around 300 staff now, even higher than in the middle of last year. We do get rid of one or two people if it doesn't work out. We're not a hire and fire mentality. We are careful when we do the hiring.
Where have you cut costs?
The difference with us is in the good times we didn't pile on the costs. In bad times or good, we don't hire left and right and risk mushrooming costs. In our current position, with Credit Suisse, we are extremely busy because we will have more assets to manage as a result of the acquisition.
Has will the organisational structure after the merger?
After the merger, the equity side will be run the Aberdeen way. On the fixed income side, there will be more of a merger. Both investment teams will be merged, but that's really more in Australia.
On the fixed income side, given that credit Suisse lost its credit side, they were managing things from a top-down point of view. Given that they have better resources, we were managing from a bottom-up point to view. We have a lot more expertise on credit, which has generally been a disaster. We are combining the three or so guys in Credit Suisse with the five or six guys at Aberdeen.
What are your immediate plans for Aberdeen in Asia?
Integrating with Credit Suisse and looking at other things beyond that. We set up in Malaysia not long ago, which is going very well so we are building on that. We opened an office in Shanghai six months ago that's a rep office. We set up a marketing office in Taiwan, and we also have a rep office in Seoul.