Allianz Global Investors has recently declared selling its China investment capabilities to be a ‘global initiative’, and RCM, its funds unit with the biggest equities presence in Asia, has stepped up its sales efforts to investors in the United States, Europe and Australia.
Mark Konyn, Asia-Pacific CEO at RCM, says institutional investors in the West are becoming more focused on specialised mandates at the country level, as are some sovereign wealth funds in the Middle East and Asia. But he acknowledges RCM has had to refocus some of its energies to sell its Greater China equity capabilities.
“As a former boss of mine always said, ‘Nothing happens in a company till you sell something’,” Konyn muses.
More of his time is on the road, particular in North America, to sell RCM’s Asia-focused funds, including its Ucits fund lines in Dublin and Luxembourg, as well as products domiciled in Asia and the US.
“As a group, we haven’t done a great job parading our capabilities, but we have a strong track record and capacity,” Konyn says.
RCM’s San Francisco base provides a big salesforce for both retail and institutional markets, which complements Allianz Global Investors’ global sales network. The firm has long-standing relationships with the bulge-bracket brokers in the US which sell RCM mutual funds, as well as institutional relationships with endowments, pension funds and family offices.
Konyn says the firm has recently notched China-specific mandates from several US endowments and a large Canadian pension fund. “Many of these groups are sophisticated and already have Asia exposures,” he says. “They often have their own presence on the ground here.”
One product that is selling well among North American clients is an Asia-focused small- and mid-cap fund. “These investors have the large-cap space covered and they see value in the mid-cap space, but they lack detail on these companies in Asia,” Konyn notes.
Despite the market turmoil of the past two weeks, Konyn believes investors will continue to search out risk assets, notably emerging markets. With the US Federal Reserve having pledged to keep short-term rates at zero for two more years, investors will have no choice but to seek out assets that can provide a higher return.
That may not mean a wall of money headed to Greater China equities, but volatility in the market will continue to generate anomalies. For example, a 20% intra-day drop in the Hang Seng Index one day last week led to a huge valuation gap between H-shares and A-shares. “Active managers will be able to pick off these market anomalies one by one,” Konyn predicts.