Fund house Investec Asset Management has underlined the importance of China as it continues to focus on its regional buildout in Asia Pacific.
The $120 billion asset management arm of South Africa’s Investec PLC is preparing to launch its first A-share strategy, having received a qualified foreign institutional investor (QFII) licence last year and a $100 million quota this January.
At the same time it is exploring what it sees as significant opportunities to work with Chinese insurers amid a relaxation of global securities they’re allowed to invest in.
“We have been engaged in some opportunities [with Chinese insurers], mainly in equity strategies, and they have been evolving reasonably quickly,” John Green, head of the global client group for Investec AM, tells AsianInvestor.
The firm is also understood to be looking to expand into the retail segment in Singapore, having opened its office in the Lion City in September 2012, as reported.
That was the year it first prioritised Asia expansion, appointing Tobie van Heerden as head of institutional business for Southeast Asia in March of 2012. At that time Investec said 5-10% of its assets were sourced Asia Pacific, although the firm declines to reveal what the percentage is currently.
Investec now has regional offices in Hong Kong, Singapore, Sydney and Taiwan, and Green confirms it has no plans to extend that at present.
Late last year the firm hired Asia retail funds specialist Beonca Yip from Eastspring Investments to add to its regional expansion drive.
“We have been building up the team and engaging with distributors to understand their needs,” added Green. “We are looking to work with large distributors where we are able to extend our product presence in a way that suits them, and to support that in the field.”
The A-share strategy is the latest evidence that the firm is striving to diversify its investment offerings. It comes after the firm launched an offshore RMB bond fund domiciled in Luxembourg on June 20, which it went on to convert to a Ucits product this July.
The firm is now fairly evenly spread across equities, fixed income and multi-asset. “Before we had positioned as a specialist provider mainly in commodities and resources, with energy, global natural resources and gold products,” noted Green.
“A year-and-a-half ago we were confident we’d completed that process and felt we wanted to build out some other areas and had the ability to compete.”
Green suggests that institutional investors in Asia are showing interest in private equity and private debt opportunities as well as listed African equity strategies.
“We have seen a lot of enthusiasm, but large institutional asset owners in Asia find it a bit difficult to commit in small sizes,” he said, pointing to the liquidity challenges. “We spend a lot of time talking about it.”
Outside of Asia, Green said Investec AM had seen flows into its Asian strategy from developed market institutions. “We get more requests for that [Asian equity] strategy than any other at the moment,” he said.
It was back in 1998 that Investec acquired UK-based Guinness Flight Hambro as its international asset management business, rebranding it Investec Asset Management in 2000.
Investec’s approach to equity investment starts with a screening process based on four factors – value, strategy, earnings dynamics and technical factors. This creates a universe of stocks that it analyses fundamentally in a strategy built on behavioural finance.