MAS names sustainability head; Malaysia’s EPF appoints COO and CFO; GIC PE head for SEA leaves; State Super hires new exec; Hesta appoints chief growth officer, chief Debby Blakey appointed to corporate governance board; ex-BlackRock exec joins IQ-EQ in Singapore; HSBC AM builds direct real estate team; ex-Vanguard head of distribution joins LGIM; Sanne names Singapore head; and more
ôThe demand we sense from Asian institutions is for income-based investments,ö he says, ôprimarily in fixed income and real estate. Investors in markets such as Japan and China want clarity in their sources of income. ThereÆs a lot of change going on in global credit markets, especially in structured finance.ö
Like many fund managers in the United States, Principal has developed expertise in managing collateral as American banks and other financial institutions securitise various assets to get them off the balance sheet.
But while most of these fund managers have since developed this business in Europe as well, Principal is aiming to develop this business in Asia. Its Singapore-based investment managers are building portfolios of securitised assets sold by regional financial institutions, which can be commingled and split into tranches of varying risk that a partner investment bank can sell.
ôA high-yield and leveraged-loan market has begun in East Asia,ö Mccaughan says. ôItÆs still small compared to the US but it will accelerate.ö
The firm is best known in America for managing defined-contribution 401(k) plans, but since 1999 it has developed the capability to run accounts for big institutions, and now claims to manage money for 10 of the top 25 largest pension funds in the US.
It has a retail presence in Asia, including Hong Kong (including an MPF business), Maalaysia through a joint venture with CIMB, and China through a joint venture in funds with China Construction Bank. But two years ago it began developing an institutional team to develop business among AsiaÆs large pension funds and central banks, led now by Kirk West, managing director in Singapore.
The firm realises the competition is fierce and it has to prove itself, but it hopes to win over Asian investors through innovation and developing products to suit local needs, rather than try to export its US model.
The firm says it now competes successfully for business from Australian superannuation funds and other investors. It has developed an Aussie dollar-denominated global income fund that invests in high yield, asset-backed and mortgage-backed securities and preferred securities. It hedges out longer durations and aims to return 2-3% over cash with low volatility. The firm has also introduced global real-estate funds to that market which it says have sold well. Principal hopes to develop this sort of product for East Asian investors too.
Mccaughan says investors still get good value from fixed income. ôI donÆt think thereÆs a bubble in the fixed-income markets,ö he says, arguing that compressed yields are a function of excess liquidity, excess savings, and the demise of inflation thanks to global competition. He notes that spreads of 4-5% seem low today only in comparison to the late 1990s and early 2000s, but this period was an anomaly catalysed by the collapse of Long-Term Capital Management. ôSo must find out where you can get higher spreads,ö he says, adding the firm is a big player in AmericaÆs small but high-yielding preferred-securities market.
Kwap property arm appoints CEO; VFMC names new CEO as Lisa Gray retires; MSIG Singapore promotes Mack Eng as CEO; Monroe Capital opens first Asia office in Seoul, hires head from Aberdeen; Vanguard Australia appoints new MD to relocate from US; HSBC AM expands EM debt team; Vantage FX hires from CGS-CIMB in Singapore; and more.
Financials and healthcare have been spotted as promising sectors, while several tech IPOs are on the way, including a $2.2 billion fintech firm and a GIC-backed e-commerce startup.
A strong recovery in the Asia Pacific private capital markets in 2021 sets up favourable hiring and compensation trends.
The $95 billion Korean savings will set up a separately managed account for real estate debt investment early next year in order to shorten decision-making and help it win deals in a crowded market.