The FSA Spy market buzz – 13 May 16

By FSA Spy

Added 13th May 2016

Spy talks politics; Aberdeen goes for content; Friends Provident changes; Swiss Life move, make a call DBS; fund managers sexing up numbers; 100-year bonds?; and much more…

The FSA Spy market buzz – 13 May 16

Spy found himself in a Brazilian bar in downtown Manila this week discussing politics: Trump, CY Leung, Brexit, et al. His convivial wealth manager guests were downing San Miguel beers to celebrate Rodrigo Duterte’s presidential win. Meanwhile, Spy sipped six too many Caipirinhas, which resulted in a hangover to match Dilma Rousseff’s impeachment headache. With so many shenanigans going on in politics, Spy wonders who wants the cursed job? Then again, fund management is not exactly easy at the moment, with most performance looking more Newcastle than Leicester City...and yet there is no shortage of people queuing up to “run the money”.  Suckers for punishment, the lot of them, says Spy.

Spy’s commercial colleagues have been telling asset managers for years that building quality, credible content is half of the fund marketing battle – after all, if people don’t understand your product, how will they buy it? Well, it seems Aberdeen is listening. Spy can now reveal that Leigh Powell, formerly at Asian Investor, has popped up in Aberdeen’s Hong Kong office working with stalwarts Alex Boggis and Wincy Mak to head their new content role.

Spy hears that Aviva’s international wealth platform, Friends Provident International, has a shuffling of the guard in Singapore. Long time local CEO Chris Gill is returning to the UK in June and stepping down from the Aviva family. His replacement, who has arrived this week, is Australian Andrew Waddell, whose career includes time at AMP and AXA.

Talking about wealth insurers, Spy hears that Thomas Henze, CEO of Swiss Life in Singapore, is returning to Switzerland. He is rumoured to be taking on a much bigger role across the specialist universal life player. No replacement has been confirmed.

Quietly, high yield has had a great month for Singaporean investors, observes Spy. AB, Allianz and Franklin Templeton have all got funds in Asia that have done more than 4.5% in the last 30 days alone. Nice work if you can get it. So, while gold has had all the excitement with BlackRock and J.P. Morgan Asset Management’s resource teams purring for a quarter, ask the credit boys and girls to buy the next round. For the record: AB FCP I Global High Yield Portfolio AT CAD H up 6.16%; Allianz US High Yield AM (H2-GBP) GBP up 5.09%; Franklin High Yield Fund A (Mdis) SGD-H1 up 4.36%. Good effort.

Go on DBS, get off that fence of yours, says Spy! On DBS’s wealth management page they have conveniently provided a periodic table-style set of equity recommendations. It includes the options buy, hold, sell and something Spy presumes is full value. Do the test yourself: DBS does not make a single sell recommendation in Singapore, Hong Kong, Thailand, Malaysia or Indonesia. They are either super bullish or doing their very best to keep the equity desk happy…

Spy sees that European fund managers – even some large ones -- are getting called out for spinning performance numbers. According to Cerulli, “Investment consultants we interviewed complained that asset managers are submitting back-tested performance data as the numbers of a real fund.” It doesn’t stop there. Other tricks include “sweeping a poorly performing product under the carpet either by changing its name or its mandate; data being changed without explanation between pitch and proposal; managers launching or adapting products based primarily on market demand”.  Spy wonders if these sneaky tactics could tie into the recent S&P Dow Jones data that shows 70-80% of actively-managed European funds have failed to outperform their benchmarks over three-, five- and ten-year periods. Ouch! No sexing up of performance has been happening in Asia, right? Spy wouldn’t mind hearing about it if you know a thing or two.

Spy asks, what next after QE fails to spark growth, after negative interest rates crop up and as the hunt for yield looks like it will be increasingly tough for maybe decades? 100-year bonds, of course. Spain, Belgium, Ireland, and France are issuing bonds with maturities of up to 100 years. That leads into Spy’s extended quote of week, courtesy of Joshua Kennon at Kennon Green & Co:

Benjamin Graham once wisely observed that more money has been lost by investors ‘reaching for yield’ than stolen at the barrel-end of a gun. During periods of anaemic interest rates on fixed-income securities, bank deposits, and cash equivalents, a combination of impatience, action bias, and desperation causes savers to do what they would otherwise consider extraordinarily foolish. What is more astonishing is that not only do they commit these economic transgressions, they do so with unabashed glee, clamouring over themselves to make sure that they, too, can be put on the list for what amounts to all-but-guaranteed misery down the line.”

100-year bond maturity? Presumably European economies will have recovered by then, but inflation, why would you worry about inflation?

Spy’s photographers have been pounding the streets hunting for interesting asset and wealth management advertising.

Not much going on, it must be said.

Stan Chart is back to its voucher ways. At this rate, Spy thinks Takashiyma is doing the better sales job...


Next, Bank of China is offering some hard cash, which Spy always prefers (along with vintage wine).


Finally, Pictet is building out the brand and at the same time reminding Spy of a moody Harold Pinter play.


Until next week, keep smiling – it's Friday the 13th after all.


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