Updated: HuaAn HK rebuilds after leadership resigns
More information has come to light regarding yesterday's story on HuaAn Asset Management in Hong Kong. Yesterday this story ran under the headline, "HuaAn HK replaces chiefs amid strategy review", implying the review led to those individuals being shown the door; to clarify, the review is a reaction to the leadership team's decision to resign.
HuaAn Asset Management’s Hong Kong arm has brought in Tang Yi as chief investment officer and deputy chief executive as it re-evaluates its product line and business development plans for the next few years.
Tang took on the role last month and will oversee investment and operations, although it is not clear why his title is not CEO or whether that role will be filled at some point. He was until last year general manager at Edmond de Rothschild Asset Management (EdR AM) in Hong Kong, a firm he joined in 2006.
He has been hired because most of the leadership team resigned en masse in August, including CEO George Ding and CIO Lee Juwan, as well as the heads of operations, compliance and business development. The defection was due to a philosophical difference with the parent company in Shanghai over the future of the business, according to a person familiar with the situation. (AsianInvestor incorrectly reported Ding and Lee having been on gardening leave since October.)
The company asked the team to remain to help with a transition. New contracts were drawn up and the team agreed. This week marks the end of their commitment. It is not known if they will seek employment or opportunities together as a team, or individually.
Tang plans to hire a senior sales executive to cover institutional investors in Asia Pacific and build up a research team with the hire of several analysts in the first half of next year. The eventual goal is to build out HuaAn AM Hong Kong’s active equity fund capabilities, he says.
But evaluating the firm’s business model is one of his first initiatives. “We are currently reviewing the product and business development strategy [and] will finalise our new strategy in the first quarter next year,” Tang tells AsianInvestor. The firm aims to make a profit in the next 12-to-18 months.
One result of the review is the withdrawal of its application for a CSI 300 RQFII exchange-traded fund in October. It had planned to launch the ETF in January with the Rmb2 billion ($328.2 million) in RQFII quota it received in April. Tang attributed the application withdrawal to timing issues.
“ETFs [are] kind of a passive investment product that we must have to enrich our product line. However, we have to time the listing better,” he says. The firm still plans to list the RQFII ETF, but he declined to offer a timeline. HuaAn’s ETF must list by the second quarter or the firm risks having the quota withdrawn.
Other products under review include the Rmb1.1 billion HuaAn Aggregate China Bond Fund, which launched in 2012 and a RQFII segregated accounts business it wants to start with Rmb800 million of quota.
Like many Hong Kong subsidiaries of Chinese fund houses, HuaAn AM has struggled to raise funds for a number of reasons, such as oversaturation of similar fund products in Hong Kong and a lack of common ground with foreign investors.
Shanghai-based HuaAn Fund Management manages Rmb95.5 billion in total AUM across 36 mutual funds.