AsianInvestor’s marquee awards, explained (part 1)
Every year, AsianInvestor's editorial team conduct an intensive analysis of the region's leading asset management service providers, fund products and asset managers, to ascertain the top organisation of the previous year.
The winners of these categories combined a mixture of business performance, growth and progress, measured on both quantitative and qualitative criteria.
Below, we reveal the first half of our marquee awards and explain why we chose this year's winners. These cover the top asset service provider, best ESG strategy adviser and several of our alternative asset manager categories.
Data on the fund performance of alternative asset managers was provided by Preqin.
ASSET SERVICES PROVIDER OF THE YEAR
HSBC Securities Services
For a strong all-round service, across borders and client types, HSBC Securities Services continues to stand out.
The custodian had a good year of growth, expanding its assets under custody (AUC) in the region by over 15% to well over $4 trillion. Its assets under administration grew more than 14% from nearly 4,000 funds, for a total exceeding $800 billion.
This growth was broad-based. In addition to expanding its India AUC by well over 200% (see Best Global Custodian for Mutual Funds), HSBC Securities Services built its AUC in China by almost two-thirds and raised its Taiwan business by close to one-third. The bank grew this in large part by building on business flows with existing clients, but it also gained close to 600 new mandates; more than double the total it had registered in 2018.
Other areas of strength included HSBC Securities Services' success with several asset owners, including one major international life insurer which appointed it to be its fund administrator, transfer agent, depositary and custodian for a new European SICAV.
In addition, the cusrodian broke new ground with its HSS Digital Vault Solution, which uses distributed ledger technology to keep virtual records of important certificates and documents. A Japanese life insurer used this to keep 600 certificates worth over $10 billion. Singapore Exchange and Temasek also worked with HSBC to use the distributed ledger technology to service fixed income securities.
BEST BUSINESS DEVELOPMENT
The fund management arm of the Teachers Insurance and Annuity Association of America (TIAA) has become one of Asia's fastest-growing institutional investor-focused fund houses in Asia over the past few years.
2019, and even 2020, marked a particular period of success. At the end of last year, Nuveen's regional assets under management (AUM) were in the double digit billions, and about three times the amount it had three years earlier. Impressively, it boasted continued asset growth during the first quarter of 2020 despite the Covid-19 pandemic. While this period is outside our award period, it demonstrates Nuveen's ability to maintain its growth momentum.
The fund manager has done so in large part by taking a heavily consultative approach that is catered to the preferences of its potential clients. This approach is combined with a commitment to environmental, social and governance (ESG) characteristics with an array of funds from fixed income to private assets such as real estate, private equity and private debt.
Key areas of growth include municipal bonds, high yield and emerging market fixed income, along with significant investment flows into real estate. Nuveen invests about 10% of its entire $1.1 trillion AUM in property, making it one of the top 10 real estate investors in the world. It invests conservatively, generally into core-plus and core, which offer careful asset owners some reassurance. That may seem boring, but it may not be a bad strategy given current market conditions.
BEST ESG STRATEGY ADVISER
BNP Paribas Asset Management
As statements of commitment to ESG go, BNP Paribas Asset Management's announcement in September that it would be making ESG universal across all its actively managed flagship funds was very profound.
The French house has long taken sustainability seriously, but this effectively means ESG is now its default option for its key investment solutions. As of the end of 2019, it had passed nearly 300 of its investment strategies and over 900 products through its ESG committee to be vetted. It boasts over 200 ESG 'champions,' or individuals embedded in its global investment teams.
In Asia in particular, the fund manager saw its assets under distribution of its Sustainable+ range of products shoot up by nearly two-thirds to around $2 billion throughout 2019.
Other notable developments include BNP Paribas Asset Management launching an Energy Transition Fund, which gained over $60 million in assets from Asian investors from its launch in August 2019 to the end of the year and outperformed its benchmark by 10% during that period. In addition, the fund house has to-date conducted 77 ESG-themed events across Asia, which have had over 5,000 attendees.
All in all, BNP Paribas Asset Management is underlining the depth of its commitment to implementing ESG on behalf of all its clients.
BEST PASSIVE MANAGER
CSOP Asset Management
CSOP Asset Management has long been one of Hong Kong's most innovative and boundary-pushing exchange-traded fund (ETF) providers.
It continued in this vein during 2019, launching a range of leveraged and inverse ETFs, as well as money market and passive quantitative strategies. The market demand was strong and ensured that CSOP raised its AUM by over 15% to around $6.3 billion.
It broke new ground last year when it launched the first two-times inverse product in Hong Kong – the CSOP HIS daily 2x Inverse ETF. The new product proved to be a success, gaining $500 million in capital flows from its launch to the year's end. Other notable new products included new money market ETFs, denominated in US dollars and Chinese renminbi.
CSOP Asset Management's ETFs dominate secondary market trading in Hong Kong too. Six out of 10 of the most traded ETFs during 2019 were CSOP products, which included L&I products, a China A-shares ETF and one money market ETF too.
Meanwhile, CSOP introduced swaps to its ChiNext ETF to help improve the performance of the underlying asset and potentially generate more yield for the fund. The fund house has continued developing its quantitative team, which now comprised 13 experts, including an index chief investment officer.
BEST REAL ESTATE MANAGER*
It is easy to explain why logistics expert GLP has prevailed in the real estate category for the second year in a row.
In September 2019, GLP completed the sale of 179 million square feet of US assets from three of its funds to Blackstone for $18.7 billion, the largest-ever private real estate transaction globally. Within four years, the GLP team, led by chief investment officer Alan Yang, had scaled up the business.
GLP also entered into a landmark agreement with China Merchants Group to acquire 50% of their private equity arm, China Merchants Capital, to expand GLP's investment scope further into infrastructure, finance and private equity, as well as support the core logistics real estate business globally.
In addition, the Singapore-based fund house raised more than $9 billion of logistics real estate funds across China, Japan and Brazil and expanded its partnerships with new and existing investors. By the end of 2019, it had $86 billion in AUM across real estate and private equity funds.
Also in 2019, GLP leased more than 16.5 million square meters (178 million square feet) globally – equivalent to 2,300 football (soccer) fields – and is raising additional core fund initiatives across several markets to support its global development pipeline. While doing so, it is pushing an ESG agenda, including the installation of solar panels on warehouse rooftops.
BEST PRIVATE EQUITY MANAGER*
Quadrant Private Equity
Australian mid-market private equity player Quadrant Private Equity boasted a particularly busy 2019.
The fund manager showed standout performance in its existing funds, with its Quadrant Equity No. 4 boasting an internal rate of return (IRR) of 30.9% last year, according to alternatives data provider Preqin. That made it the second-highest performing private equity fund across the Asia Pacific (excluding funds of under $300 million in size).
Quadrant's Equity No. 3 was also a strong performer, with a distribution-to-paid-in (DPI) multiple of 184.2% in 2019 and a net IRR of 31.1%.
Quadrant raised a new fund too in April 2019, gaining A$400 million ($269 million) for a growth fund, which is 25% higher than its initial target. The commitments all came from existing limited partners in its flagship funds.
At the same time as it reported robust performance and raised a new vehicle, Quadrant was in the market for new assets. Its new growth fund was quick out the blocks, acquiring a majority interest in Modibodi, a woman's underwear company, in September 2019, then buying 60% of online beauty products retailer Adore Beauty in the same month. Earlier, Quadrant bought online auctioneers GraysOnline and AreYouSelling from Eclipx Corporation for $60 million in a management buyout.
2020 has been a tougher year for Quadrant because several of its businesses have been adversely affected by Covid-19. However, with Australia opening back up again, the private equity group will undoubtedly seek new targets and regain momentum for potential sales.
* These categories were only applicable to Asia-Pacific-headquartered fund managers