The investment industry of Asia Pacific has come on leaps and bounds in the 20 years since AsianInvestor began publishing. To celebrate our 20th anniversary edition, published in late June, we asked a set of the most experienced and senior industry veterans about the major changes they have seen, within their organisations and in the wider market.
Hugh Young is a legendary figure in Asia's investment industry. Having joined Aberdeen Asset Management 35 years ago, he set up its Asia headquarters in Singapore in 1992 and remained regional head after the firm merged with Standard Life in 2017 to form Aberdeen Standard Investments.
Q. What are the key ways in which your organisation has changed from 20 years ago?
We’ve become a lot bigger in terms of assets under management, operations and product offering.
Twenty years ago, we were active in fixed income and equity in Asia. Now we invest into property, multi-asset, infrastructure and other alternatives in the region. In 2000, we had £2 billion ($3.24 billion at the time) in AUM and three offices in Asia Pacific; now we have £43.8 billion and 11 offices.
We had the feel of a boutique, albeit a fairly large boutique, in 2000. I think we’ve retained some of that feel but becoming a bigger organisation [particularly through the Aberdeen-Standard Life merger] has inevitably brought more bureaucracy.
Q. Why did you choose Singapore in the first place, rather than Hong Kong?
Because it more closely reflected our investment philosophy: long-term, steady and thoughtful rather than frenetic and trading-oriented. In addition, there was Singapore’s independence, its strong regulator and excellent airport.
Q. How did the 1997/1998 and 2008 financial crises change the business? Do you see the same happening with Covid-19?
We’ve been through a few crises where basically all profitability disappears. You have to make sure you stick to your knitting and communicate with clients, just as we’re doing now.
As a result, the way you do business develops technologically, and that’s happening this time around too. Covid-19 has accelerated change; change that was happening anyway.
Q. How is industry consolidation affecting the landscape for institutional clients?
There is a lot of pressure on asset managers, as there has been for years. If you look at our annual reports over the years, you’ll see evidence of pretty major fee compression. That prompts consolidation. And it also promotes spinoffs, as you’re still seeing – people leaving major houses to concentrate on their speciality.
So, there’s still plenty of choice for clients, though a certain ‘squeezing out’ of lower-end asset managers is taking place.
Q. How does your organisation need to change in the coming five to 10 years to maximise its investment performance?
A lot has to do with streamlining and efficiency, using technology. We’ve been doing that, but we’ve still got a long way to go. In many ways it’s about smoothing the process so that investors spend time investing rather than doing other things. This involves using new tools like AI [artificial intelligence].
I hope and think you’ll still need humans. But trying to get everything properly integrated is the big challenge. We’re doing that, but you’ll never be perfect at it – it’s a perennial challenge. In a sense it’s necessary for economic survival.
Q. What’s your proudest achievement in your role?
It’s got to be helping our people develop. It’s been wonderful watching the people that we’ve had historically, of whom many are still with us.