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 organisations of the previous 12 months.
The winners of these categories must combine a mixture of business performance, growth and progress, measured on both quantitative and qualitative criteria. Below, we detail why we chose the first half of this year's winners of our market award categories, which comprise the top fund houses in each major market.
Macquarie Asset Management
When financial markets turn volatile, Macquarie Asset Management’s diverse investment footprint acts as a shield against poor performance. The group’s newly anointed chief executive Shemara Wikramanayake calls this staying profitable while one door opens and another closes, and in the year to March 2019 several of the firm’s defensive funds were top performers in Australia.
According to data provider InvestSmart, Macquarie’s sovereign bond fund returned 7.09% during the period, while its property securities fund returned 22.05% and its global infrastructure fund returned 22.85%.
Wikramanayake led the asset management arm of Macquarie Group for a decade before being elevated to CEO at the end of last year, ensuring ongoing top level support for the division which takes a long-term, high-conviction approach.
Macquarie Asset Management reported assets of A$549 billion ($382.28 billion) as at March 2019, up 11% on the previous year. About 35% of that is held in infrastructure and real assets, while the rest is in managed funds. The division contributes about one-third of all earnings to the group, and in the 12 months to December 2018 profits for the division were up 10% year-on-year to A$1.7 billion.
In June last year Macquarie Asset Management extended its investment capabilities with the purchase of Luxembourg-based ValueInvest Asset Management, which had AUM of €3.7 billion ($4.16 billion) and a team of 17 value-oriented global equities professionals. They have all now joined the Macquarie fold.
China Asset Management
China Asset Management Company (ChinaAMC) is hardly a wilting flower; indeed it's not just one of the largest fund houses in China but a sizeable player in the globe, with $144 billion in assets under management (AUM) as of end 2018.
Yet despite its size, the fund house has dedicated its investment capabilities at offering its clients long-term capital appreciation. The success of its efforts to do so were recognised by one of biggest asset owners in China in a client testimonial to AsianInvestor.
ChinaAMC doesn't just target local investors; the fund house is also a leading qualified foreign institutional investor (QFII) and renminbi QFII manager, helping overseas institutional investors to invest in China. In addition, it has been the largest corporate pension manager for 11 consecutive years, serving more than 200 corporate pensions.
Last year, ChinaAMC joined hands with US fund house Fidelity International to promote developments of diversified pension products and services. It was among the initial batches of asset managers that obtained regulatory approval to roll out pension products in China, and launched the first pension target date fund in September.
The fund house has been building out on the technological side too, and early last year it developed with in-house expertise a situational robo-financial adviser to provide customised investment advice for clients. The adviser employs artificial intelligence technology to give the most appropriate financial management solutions for an investors’ different life stages.
Added to all of that China AMC has recognised the Chinese government's prioritisation of environmental policies, and as such it became a signatory of the United Nations Principles of Responsible Investing. When choosing this award, AsianInvestor recognised China AMC's endeavors to strengthen responsible investment research and incorporate ESG into its investment processes.
CSOP Asset Management
Last year was a tricky one for many asset managers, yet to judge by CSOP Asset Management’s asset growth, you wouldn't know it. The fund house's assets under management (AUM) grew by 9.48% to $5.6 billion over the year, as it launched timely products to cater to investors’ needs in a bear market.
The fund house is one of the biggest exchange-traded fund providers in Hong Kong, and it boasts six of the top 10 Hong Kong-listed ETFs in terms of market capitalisation. It is also the largest renminbi qualified foreign institutional investor holder and manager.
CSOP Asset Management also tries to keep pushing product boundaries, to meet shifting client preferences. One example of this was when it rolled out Hong Kong’s first HKD Money Market ETF last year, which offers principal protection and cash management in an uncertain market. The product gathered gathered HK$3.3 billion ($420 million) within only five months of its inception in July 2018, marking the largest capital inflow among all newly listed ETFs for the year.
In addition, the fund house launched the CSOP global asset momentum allocation strategy last year, which gave an alternative solution for investors looking for stable yield and attracted HK$4 billion in just two months. It is the first such strategy to be launched by a Chinese offshore asset manager.
AsianInvestor also recognised that over half of CSOP Asset Management's senior management positions are held by women, a true rarity in the fund management industry, while it also makes major efforts to improve investor education.
China Life Franklin
Most fund houses found 2018 to be a very difficult year, particularly in the fourth quarter. but China Life Franklin’s long-term fundamental investment philosophy proved successful in weathering the turbulent market, as it identified value-oriented quality investments to help investors growth their assets.
The fund manager, which is a joint venture between China Life’s subsidiaries and Franklin Templeton, has gained rapid traction in Hong Kong. By December 2018 its AUM had exceeded $27.3 billion, ranking it as the largest of the Chinese-affiliated asset managers in Hong Kong. China Life Franklin maintained almost the same AUM at the end of 2018 as it had done a year earlier despite a volatile 2018, an achievement that most of its rivals could not claim to have achieved.
It also had some standout products. One of its absolute-return equity mandates, in which the fund house can use long only strategy to invest in the US and Hong Kong stock market, enjoyed a return far in execess of its benchmark indexes.
It is fair to note that China Life Franklin benefits from investing some of the assets of China's largest life insurer. That said, a meaningful amount of its revenue comes from third-party clients, most particularly institutions covering banks, insurers, pension funds and state-owned enterprises.
In addition, China Life Franklin broadened its investment product array from long only strategies, amid 2018's fluctuating markets. It developed smart beta, low volatility/high dividend strategies as well as a quantitative multi asset strategy, to meet investor needs in a less certain financial environment.
ASK Investment Managers
ASK Investment Managers (ASK) increased its market share in India by raising its assets under management (AUM) by almost one-third over 2018; no mean feat.
The fund house began the year with assets under management (AUM) of the equivalent of $2 billion, and with gross sales throughout the year, but through consistent fund-raising efforts it had managed to raise its AUM to around $2.9 billion by the end of 2018. Around 60% of this sum was raised domestically.
It particularly benefited from the strong performance of its flagship portfolio, the ASK Indian Entrepreneur Portfolio (IEP). It delivered 14.5% in returns for the financial year, outperforming local benchmark stocks indexes BSE500 and Nifty50. The nine year-old IEP has an AUM of $1 billion.
Other than this cornerstone product, 2018 also saw ASK launch a number of new products in line with its emphasis on its core capabilities as well as taking advantage of the macroeconomic development in India, that has seen the country become the fastest growing top 10 GDP nation.
In addition to taking advantage of a domestic resurgence and a financial opportunities product, ASK also introduced a multicap open-ended Category III alternative investment fund (AIF) – in essence a fund that makes short-term investments and then sell them, in a similar manner to like hedge funds – that gained good interest. It accompanies these products with the India 2025 Equity Fund, a closed-ended, long-only Category III AIF, that also helped to broaden its capabilities and underlined its growing appeal to local investors.
PT Manulife Aset Manajemen Indonesia
Despite a challenging market environment in 2018, PT Manulife Aset Manajemen (Mami) underlined its credentials by ensuring most of its funds did well. In total, 65% of its funds outperformed against the benchmark, according to data from Lipper.
It was particularly strong in fixed income, where 82% of its fixed income and money market funds outperformed their benchmarks. Of course, this meant its equity and balanced funds were less impressive, but 57% still outperformed – a noteworthy improvement over the 5% that had done so in 2017.
A combination of this sort of outperformance and its affiliation with Canadian life insurer Manulife helped Mami to outpace the expanding mutual fund industry in Indonesia. The asset manager has used the experience and knowledge of its partial parent to focus on the retail client side where investment and retirement saving education has been key in relatively low literacy country. That led Mami to focus on low risk products that are dominated by money solutions, as these products are more appealing and easily explained to clients.
The sheer size and disaparity of Indonesia – its 269 million population is spread among 17,000 islands – has meant that Mami has largely grown its mutual funds through an online digital platform, while in December 2018 it signed an agreement to make mutual fund product purchases possible through the 15,000 outlets of convenience store chain Indomaret. That's helped it appeal to many more customers in and around the Jakarta capital region and beyond.
Mami is building out its product capabilties further too, to account for the religious nature of some of the island's investors. In 2018 it launched new shariah-compliant fund products in the predominantly Muslim Indonesia, helping Mami to become the biggest shariah-compliant asset manager in the country in terms of dedicated AUM size.
Sumitomo Mitsui Trust Asset Management
2018 was a transformative year for Sumitomo Mitsui Trust Asset Management (SMT). In October, the company successfully completed the merger of its retail and institutional asset management businesses. The merger made SMT the largest asset management company in Asia-Pacific, with ¥66.9 trillion ($613.47 billion) of assets under management as of end of March 2019. More than 80% of these assets stem from institutional investors.
On top of conducting this landmark transformation, SMT also spent 2018 launching new products and gaining some new mandates. For instance, the fund manager won mandates from sovereign wealth funds, which ensured it enjoyed an inflow of several billion dollars from sovereign wealth funds to both its global and Japanese passive strategies. A combination of new and existing clients also invested more into its Japanese actively managed strategies, despite the uncertain and generally declining market conditions.
On the product side, SMT launched three Ucits funds; “Sakigake-魁”, a large cap product, as well as “Japan Small Cap” and “Japan Small Cap II”. With these new products, the fund house now has five Ucits funds.
It has also demonstrated an increasing commitment to environmental, social and governance (ESG) principles, an area that continues to gain traction in Japan. These efforts were recognised last year when SMT won a 'Tokyo Financial Award 2018' from the local government of Tokyo in the ESG investment category.
SMT’s signature fund is the Japan Small Cap Strategy available to overseas investors. The fund has been winning mandates from offshore investors, mainly due to its consistent performance since its inception, generating more than 20% return yearly since 2005 as of the end of November 2018, outperforming its main peers.