AsianInvestor's top funds by market, explained (part 1)

We describe why each of this year's top fund managers by Asia market stood out from their peers.
<i>AsianInvestor</i>'s top funds by market, 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 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 top fund managers by market, encompassing China, Hong Kong, India, Indonesia and Japan.

Harvest Fund Management

As one of the largest fund houses in China, Harvest Fund Management has demonstrated its dedication to keep improving its investment capabilities and offering innovative products to its clients. AsianInvestor also recognises its capabilities in the environmental, social and governance space.

As of the end of 2019, Harvest serves over 100 million investors and manages over Rmb1 trillion ($140 billion) in assets. It achieved a return of Rmb55.647 billion for investors in 2019, outperforming most of its peers in the category.

During the year, it released over 40 new mutual funds covering fixed income funds, equity funds, quantitative investment funds and exchange traded funds (ETFs). The Harvest Science and Technology Innovation Hybrid Fund particularly stood out. It was in the first series of the science and tech innovation funds approved. The fund raised more than Rmb10 billion on its first day of Initial Public Offerings, well above the limit of Rmb1 billion.

In the ETF space, the fund house launched the Super ETF brand, the first concept-driven smart beta in the market. It also listed the Harvest CSI300 ETF Option as well, which marked the first ETF Option contract in China’s market. With assets under management of Rmb27.2 billion, the product greatly enhances the mobility of Harvest CSI 300 ETF – it offered AUM growth of nearly 10%.

Harvest was one of the first Chinese fund managers to officially become a United Nations Principles for Responsible Investment signatory, doing so in 2018. Last year it launched the Harvest CSI 300 ESG Pioneer Index, which consisted of the best 300 performing ESG companies selected by its own proprietary evaluation system.

Haitong International Asset Management

Haitong International Asset Management is one of the fastest growing Chinese asset managers in Hong Kong. Its AUM has soared by over eight times over the past seven years to reach HK$53.5 billion ($6.9 billion) as end-December 2019.

Last year it achieved another milestone for its business expansion. During the year, the fund house has built a team of sales and investment functions in Singapore, and by the end of 2019 Haitong IAM received the asset management license from local regulator to manage assets. The move makes it a Chinese asset manager that is based in two important financial markets in Asia, giving it the global perspectives in managing its range of investment portfolios and support for the business lines across local and global markets.

In the product space, Haitong launched three new private funds and a new share class under Haitong Asian High Yield Bond in 2019. The latter has obtained approval from the Mutual Recognition of Funds Scheme, which allows mainland Chinese investors to directly access the overseas markets without any foreign exchange restrictions.

The fund house launched one of the first multi-tranche bond funds in the Hong Kong market in 2016. Then in 2019 the Haitong Freedom Multi-Tranche Bond Fund gathered over $1 billion in assets, making it one of the largest offshore funds investing in offshore high yield bond market.

The fund house is also seen making strenuous efforts to educate investors. It conducted over 100 product specific training sessions for its clients, in addition to eight large scale client events.

JP Morgan Asset Management

JP Morgan Asset Management (JP Morgan AM) is a strong brand in Hong Kong and one of the few fund houses to boast a direct business in addition to the intermediary and institutional channels.

What made it stand out in 2019 was its ability to help investors obtain investment income in the fixed income space in a low-interest rate environment.

Its Income Fund, which invests across the entire fixed income spectrum to capture diversified risk premiums, delivered risk-adjusted returns with a three-year Sharpe ratio of 1.88% as of end-2019, way higher than the 0.8% benchmark. It has also provided investors with an annualised dividend payout of at least 5% since its inception.

In addition, among the 65 authorised funds that JP Morgan AM offered in Hong Kong in 2019, 28 received 4- or 5-star ratings from Morningstar. Forty of them outperformed peers and achieved first or second quartile ranking based on three-year performances, demonstrating its outstanding investment capabilities.

The fund house has been a pioneer in the Mutual Recognition of Funds (MRF) scheme since it was introduced in China and Hong Kong in 2015.  In 2019, JPMAM received the regulatory greenlight to launch three more Hong Kong-domiciled funds to mainland investors, bringing the total to five and consolidating its leading position in this area as the foreign firm has the highest number of approved northbound funds.

Its institutional business also continued to play a prominent role in its AUM mix. JPMAM was entrusted with more than $10 billion in new mandates in 2019. The mandates span across fixed income, equity, alternatives and multi-asset strategies to meet new clients’ needs.

SBI Funds Management

One of the leading players in Indian equities and fixed income saw massive growth in 2019. Its assets under management increased by 215.4% (from $45.99 billion to $145.05 billion) year on year. Out of the $145.05 billion that it had at the end of 2019, 83% was managed on behalf of institutional clients.

2019 saw SBI Funds Management attract overseas capital from very diverse institutional investors from around the world. The list includes a pension fund from Chile and Peru as well as investors from both Japan and Europe, with the latter including a very large mandate from a European public pension fund. On top of this, SBI Funds Management took over the management of the coal miners’ pension fund in its home country.

The new mandates helped the asset manager to grow its assets under management in domestic funds by 34.5% (from $38.75 billion to $52.11 billion) year on year. Its segregated mandates enjoyed spectacular growth, rising by 1,183% (from $7.24 billion to $92.93 billion), or almost 12-fold, year on year.

Although environmental, social and governance investment criteria is yet to reach the level of institutionalisation to have formal certification, SBI Funds Management it also pushing this agenda through internal standards.

Sucorinvest Asset Management

This year, AsianInvestor decided to award an Indonesian asset manager that might not be the biggest in the domestic market but is one of the most exciting up and coming players. Nowhere was that more obvious that by the end of 2019, when Sucorinvest Management had grown its assets under management by 85.07% to IDR10.553 trillion ($679.8 billion) over a year before.

This AUM expansion came as all of Sucorinvest Asset Management’s nine open-ended funds were able to beat their respective benchmarks last year. For instance, the Sucorinvest Equity Fund, the asset manager’s flagship Indonesian equity mutual fund, closed the year with a 6.85% return, outperforming the Jakarta Composite Index by 5.15%. It continues to be one of the top performers among publicly available Indonesian equity mutual funds.

While only 35% of the fund house’s AUM was sourced from institutional investors, Sucorinvest Asset Management aspires to increase that amount as it looks to close in on the top 10 of Indonesian asset managers measured. The firm will certainly be one to watch in years to come.

Nikko Asset Management

At end-2019, Nikko Asset Management's investment team in Tokyo could look back on a decent year. The fund house had seen its assets under management (excluding exchange-traded funds) to rise by 18% to hit ¥14.93 trillion ($137.4 billion), 18% than at the beginning of the year.

Separately, the fund manager’s ETF AUM in Japan reached ¥8.65 trillion (a year-on-year rise of 30%), meaning its overall AUM in the country stood at ¥23.58 trillion. About 13% of this total was sourced from institutional investors, 40% from retail investors and 47% from ETFs.

In 2019, the Nikko Asset Management Japan institutional business grew its privately offered investment trust AUM by the third largest amount of the 89 asset managers in Japan. Products that proved popular among its asset owner clients included its RMB Bond Fund (¥204 billion), Danish covered bonds (¥404 billion) and multi-asset strategies (¥258 billion).

The RMB Bond Fund is managed from the Nikko Asset Management’s Singapore office, and its ability to access the China onshore market was the key to winning the mandates. The fund house was also one of the first to offer Danish covered bonds and other European fixed income products via its London-based fixed income team, after identifying them as a product well-suited to Japanese institutional investors looking to generate positive bond yields.

In August 2019, Nikko Asset Management published its first Task Force on Climate-related Financial Disclosures report for 2018. It will continue to do so, as well as engaging companies into which it has bought equity to promote an environmental, social and governance agenda.

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