Having recently added to its Asia sales staff and made management changes in its London headquarters, UK asset manager Threadneedle is looking for a head of North Asia institutional business. It is also considering putting research staff in Singapore in early 2011, who will be its first investment executives in the Asia region.
Sandra Cheng will join in September as Singapore-based head of institutions for Southeast Asia, having previously worked at Deutsche Bank covering institutions in the region.
Sheila Tan, previously a business development manager focused on Hong Kong, has taken a more senior role with responsibility for Taiwan, where Threadneedle has $700 million in funds distributed via consumer banks and is starting to pitch for institutional mandates.
The increased resources are needed as the firm expands its fund range and distribution network in the region and sees institutional business growing, particularly from government institutions, says William Lowndes, who relocated to Hong Kong as head of Asian distribution in April.
The strength of sovereign institutions, particularly in Southeast Asia, and the weight of the capital they have to deploy has led them to move beyond domestic and regional assets, he says – many for the first time. Threadneedle already has mandates in the region and is talking to other sovereigns.
“We’re seeing real flow moving into equity and bond mandates, as well as a renewed interest in alternatives,” adds Lowndes, who has institutional experience from his time at Goldman Sachs Asset Management (GSAM) and other firms. “It feels like there’s more momentum than there was previously.”
What should help Threadneedle benefit from such flows is that its brand is now better known in the region, he says. “Most of the institutions knew who we were a year ago, but didn’t really understand precisely what we did,” he says. “Many had an outdated view of our offering – that we were core-European-equities-focused and not very innovative – but that’s changed in the past few years. Our product range is much broader now.”
And it’s likely to get broader still, as Threadneedle looks at renminbi-denominated funds. Asset managers such as Aberdeen, Harvest, HSBC, MFC and RCM have recently said they have plans to launch products. Lowndes reckons demand for RMB products in Hong Kong will be “phenomenal”.
“We’re going to meet with sell-side counterparties today to talk about that area,” he says. “The success of RMB funds will be inextricably linked to access to capital markets in China. We think this is very early days, but we know clients will want RMB funds and direct access to RMB assets. We will almost certainly be participating, but don’t feel the need to rush into that market.”
Lowndes notes that running such funds will require access to capital markets in China, and the recent announcements on access from Hong Kong to the inter-bank bond markets in China should be an important first step in the development of these funds.
Turning to Japan and South Korea – markets that Lowndes cited as business targets earlier this year – Threadneedle is talking to potential financial partners on the distribution side in Korea, where it does not yet have an agreement. Korea is the next country where he hopes to secure a partnership, and that would mean Threadneedle would be covering all the major markets it wants to be in for the time being.
In Japan, the firm already has a distribution agreement with Tokio Marine and runs a European equity mandate with Nomura there, which it funded earlier this year with €100 million. (Threadneedle now runs a couple of mandates within Nomura’s ‘My Story’ fund-of-funds platform.)
As for Threadneedle’s distribution agreement with Standard Chartered – following the takeover of the bank’s funds platform in May 2009 – the asset manager is working on delivering its products into SC’s private bank. It hopes to include new products such as an emerging-market corporate bond fund and a new commodities fund, both of which come on stream in September.
Meanwhile, back at its London headquarters, Threadneedle made some big changes earlier this year. Mark Burgess will join as chief investment officer (CIO) in the first quarter of 2011 from Legal & General Investment Management, where he was head of equities.
The previous CIO, Sarah Arkle, will retire to become vice chairman of the firm after a 30-year City career. Twenty-seven years ago, she joined Allied Dunbar Asset Management, one of the two businesses that merged to form Threadneedle. She was one of Threadneedle’s founding members and in 2000 became CIO.
The company completes the list of changes with a new head of fixed income in London, Jim Cielinski, who will start in October to replace William Frewen, who left the firm at the start of the year. Cielinski will run the 38-strong team that manages institutional and retail funds with a total AUM of £22.6 billion across government bonds, investment grade, high yield, emerging-market debt, treasury and asset-backed securities.
He has spent the last 12 years at GSAM, most recently as head of global investment-grade credit. He has also worked at Utah Retirement Systems, custodian firm Brown Brothers Harriman and First Security Investment Management.
The new team will have a clear mandate to continue to invest in the platform to ensure we support the internationalisation of Threadneedle as a business, says Lowndes.
“Jim [Cielinski] will come to Asia at the earliest opportunity and will support us to grow our fixed-income business here,” says Lowndes. “I’m excited about it, because I also previously worked at GSAM, so I know of his quality.”
There is certainly a big focus on fixed-income investing at present, something Lowndes admits is “partly cyclical”, although Threadneedle has been investing in the market for the longer term. For example, the emerging-market debt team, based in London, has more than doubled in London in the past year, with six dedicated fund managers there now.