Jardine Matheson’s outgoing treasurer, who has overseen the conglomerate’s $1 billion Hong Kong pension portfolio, says he has been working more directly with fund managers while becoming increasingly critical of investment consultants.
Reflecting on five years at the Hong Kong-based company, Adrian Teng also said he saw it as a personal achievement to have made the fund’s first allocation to private equity in the past few months. He is taking up a new role in the group this April, as first reported by AsianInvestor.
He said investment markets had become more volatile for long-term investors such as pension funds over the past five years, with increased risk correlation. At the same time, persistently low yields had driven Jardines to diversify and add risk to its pension portfolio, albeit within a strict risk budget. This has seen it move cautiously into Asian fixed income, emerging-market equities, hedge funds and private equity.
Early in his time as treasurer, Teng said he had sought to do more with Jardines’ existing fund houses. But as markets grew more complex and correlated, he was forced to engage with a wider set of managers to understand new asset classes and investment strategies.
He also had to develop more intimate relationships with existing managers to fully understand their investment thesis and risk strategies. “As such, the group has added asset classes, really out of necessity,” noted Teng.
Separately he has been closely involved in the evolution of Jardines’ thinking on the role of staff pensions. Positioning retirement benefits to retain talent is a key strategic consideration that many firms overlook, he argued.
“Clearly getting the returns to meet the retirement pot is important, but the question one needs to ask internally is how to position retirement benefits more strategically to retain and attract talent,” he said. “Everyone talks about investment assets, but they often miss the bigger picture.”
Jardines is assessing benefits as a core part of compensation, rather than as a footnote to it, as is often the case, Teng noted. “As a company we are now more confident we have the right benefits in place for different levels of employees.”
Jardines is a diversified group principally focused on Asia, with businesses ranging from fast-food franchises to hotels to construction and engineering companies.
The nature of employees across Jardines’ businesses calls for a more sophisticated approach to pension provision than lumping everyone into the same type of plan. This sophistication was behind AsianInvestor awarding its 2015 Institutional Excellence Award in the private pension fund category, as reported. The full list of last year's award winners can be found here.
Teng’s focus will change once he takes up his new role as group finance director of Jardine Cycle and Carriage in his native Singapore. Having served in the city-state’s navy, this will be his first return to full-time residence there for 23 years.
He will be much more involved on the operational side, driving revenue and profit, whereas in the treasurer role he has been focused on setting long-term strategic direction at the holding level. “The new role will present a different set of challenges, although it is still very open-ended,” Teng noted.
He has spent the past five years in Hong Kong with Jardine Matheson. Prior to that he has worked at banks in treasury, corporate finance, M&A and structured finance, including ABN Amro in London and Shanghai; Citi in New York, Tokyo and London; and Merrill Lynch in Chicago.
Asked to compare his time on the buy-side with the sell-side, Teng concluded: "The buy-side is way more fun."
He will be succeeded as group treasurer in Hong Kong by Craig Beattie, who has held a number of senior finance positions in the group and is currently finance director at Jardine Motors in the UK.
Jardines runs defined-benefit (DB) and defined-contribution retirement plans across the UK, Hong Kong and Indonesia. It is responsible for the pensions of 15,000 employees in Hong Kong, of whom most are still in DB plans.