For the third year, Asian Private Banker has conducted the deepest and widest survey of fund selectors at the private banks to identify which asset managers have achieved excellence throughout 2015, both in terms of performance, and also with pre and post-sale servicing of the private banks.
We are honoured and thankful to the 36 key decision makers within fund selection and distribution operations across the 28 private banks who participated in this poll.
Congratulations to the winners of the Asian Private Banker Asset Management Awards for Excellence 2016.
Asian Private Banker’s Asset Management Awards for Excellence is an opportunity for the asset management industry to gain recognition from leaders in the field of private banking and wealth management. The selection of winners is driven purely by votes submitted by key decision makers of fund selection operations from private banks in Asia, which collectively represent client assets exceeding US$1.5 trillion. Given the vast and diverse needs of various private banks based on their clientele, existing infrastructure and overall business strategy, we extend the depth of our scope to better understand what factors led to subsequent nominations of winners. We request our respondents to nominate winners based on four core factors: investment performance, business performance, service and support and, brand.
The single-most objective component of the fund selection and sales process, investment performance is an absolute prerequisite for selecting any single fund product. Be it traditional metrics or otherwise, asset managers’ performance are judged on a 1-year or 3-year period.
As private banks continue to mature into an advisory role in an uncertain market and a regulatory environment unconducive to brokerage business, recurring income will play an increasingly vital role in profitability. But recurrence, by definition, requires continuity and, effectively, consistency. From a business perspective, a viable product is not one that simply captivates investors in hot streaks but ideally one that can weather the storm.Business performance should not be valued merely by absolutes in asset inflows and fee generation. Certain products will inevitably serve a purpose with a limited window of opportunity while others are designed to last for a generation and beyond, impacting the nature of asset flows. Given the heavy resources required to on-board, market, sell and manage such products, cost-benefit ratios must be considered.
Few private banks can lay claim to truly being a one-stop shop. Large, integrated, global financial institutions may be backed by a resource centre of diverse personnel at the beck and call of relationship managers who have the slightest question about a market, asset class or product, but this is not a reality shared by all.
In turn, product providers that wish to distinguish themselves can fill the gap. Be it convenient access to portfolio managers or timely dissemination of research reports, post-sales support is essential to a private bank that simply does not have the scale to cover the entire investment universe. There are very few scenarios worse than having no answer to a question from a client.
Funds distribution through private banks is a highly competitive space that truly requires visibility. At the level of the end-client, even though mass marketing is often a retail exercise, there is value in the comfort it offers investors at the high net worth level. At the level of the gatekeeper, visibility does not mean just an online ad or a billboard in the subway. Be it media conferences, self-hosted summits, or industry seminars, it is essential for asset managers not only to be effective marketers but also to showcase their thought leadership and business insights, where appropriate.
The age of record-low interest rates is reaching its end. As investors prepare for a series of rate hikes by the US Federal Reserve in the coming months, the need to plan ahead and build flexibility and diversification into portfolios has rarely been as pressing.
Incoming hikes, combined with unprecedented global political volatility, have seen a compelling new case for Asian short duration bonds emerge, according to long-time specialists AXA Investment Managers (AXA IM).
The Asian short duration bond market is underpinned by fundamental strength, relative value, diversification, and earnings visibility, according to Jim Veneau, AXA IM’s head of fixed income Asia and manager of the firm’s Asian Short Duration Bonds strategy.
“One of the benefits of short duration credit is reduced exposure to the business cycle and better cash flow visibility,” he explained, adding that the approach allows for higher conviction bets further along the credit curve to seek a higher yield.
And at a time when investments are increasingly vulnerable to external shock, Asian short duration bonds with a targeted final maturity of less than five years offer investors a number of significant advantages, according to AXA IM:
RESILIENCE TO RATE-RISE: They are less sensitive than full maturity bonds to interest rate movements
RISK-ADJUSTED EDGE: They tend to deliver better risk-adjusted returns than investing in a full maturity bond portfolio because they are less sensitive to rate and credit spread movements
EXPOSURE TO UPSIDE DOWNSIDE MITIGATION: The short duration approach focusing on high conviction credit while limiting high volatility long duration bonds may allow participate in the upside of a market but limit the downside
NATURAL LIQUIDITY: They have a natural positive liquidity because bonds are constantly maturing, allowing cash to be strategically reinvested at higher interest rates
The investment approach is particularly timely as rate rises in the US, UK, and Europe contrast with the limited volatility of the past year in markets such as China, India, and Indonesia, where central banks have injected liquidity to keep markets stable as middle classes expand exponentially.
“Overall, short duration bonds offer potential better risk-adjusted returns than a full maturity bond portfolio, particularly at a time when interest rates will rise,” Veneau said.
AXA IM has a 15-year history as one of the market leaders in short duration fixed income strategies and manages more than EUR 25 billion as of 31 July 2017.
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