Growth-stage tech, mid-market funds in demand, says wealth manager

Kevin Teng, chief executive officer of WRISE Private Singapore, has a wealth of experience spanning over decades in investment and wealth management.

WRISE Private caters primarily to family offices and high net worth individuals and offers a suite of products and services, including funds.

In a recent interview, Teng spoke about WRISE Private’s fund selection approach, how clients are approaching ESG and other market trends.

“Private credit is seeing a lot of demand. We are a little cautious, however, because we think it is getting crowded and spreads are becoming less attractive.

We also see demand for growth-stage tech plays in Southeast Asia and the mid-market space in Australia is also in demand,” Teng told AsianInvestor.

The following interview has been edited for clarity and brevity.

Could you tell us a little about WRISE and the funds it has on its platform?

We have operations in Singapore, Hong Kong and Dubai – these are the three jurisdictions where we are fully licensed.

We also have an office in Tokyo.

We have HNWIs and family offices among our main clients and a few institutional clients as well.

We have traditional and alternative funds on our platform. Alternative funds include private credit, private equity, venture capital, secondaries and buyout funds as well as hedge funds.

We have about 200 funds on the platform.  Our fund selection team assesses what funds go on the platform.

A large part of the team is in Singapore but we have some fund specialists in the other markets we have operations in.

Could you explain the broad fund selection process?

First off, we will assess the fund’s track record although past performance is not necessarily indicative of future performance. It’s a starting point but you cannot only look at the numbers.

We want to know more about the people behind the team and what kind of experience they have, their values, etc.

We will also seek more details about the fund’s specific strategy.

We also pay attention to the kind of risk management measures that are in place. This is harder to do with private market funds compared to public market funds but it needs to be done.

And finally, we look at ESG factors of the funds as well because this is a big priority for our clients.

We also engage in market checks – to see what third-parties are saying. It’s a form of due diligence for us.

Just as you might speak to other people about a potential candidate you want to hire we ask for feedback on the funds we might decide to onboard.

We want good risk-return rewards but not at the cost of the team’s values.

How do you separate good funds from bad ones?

We will ask questions when the investments don’t do well to understand specifically what is driving that underperformance.

If there are any compliance or regulatory issues, we will raise questions about that as well.

Sometimes we also see teams led by one or two key decision makers. We think that is a red flag because there should be adequate checks and balances place.

If those checks and balances are in place, the fund could still be worth investing/recommending to clients.

Similarly, we want to see the independence of the investment committee and the funds being managed independently; otherwise, that is a red flag.

Another red flag is if a fund invests in related parties.

It’s important to have the ability to have clear communication channels with the fund. We try to speak to senior executives as well as the analysts separately.

How are wealth clients dealing with ESG requirements?

Clients usually want some kind of ESG observance.

Funds in Europe and US have implemented ESG regulations much more than in Asia. These [regulations] are not mandatory in Asia right now but various governments are keen that these criteria are looked at while investing.

There is more self-implementation by the client in this regard. It is certainly becoming more important for them. We need to know what framework they have and to ensure the products match client needs.

There is a difference between investing in impactful ESG and just slapping on an ESG label.  And we will see a clear differentiation in this regard going forward.

Any other trends you have seen in recent months?

Private credit is seeing a lot of demand. We are a little cautious, however, because we think it is getting crowded and spreads are becoming less attractive.

Currently the cash rate is about 5% . While there may be rate cuts in the future, given the geopolitical uncertainty and other risks, investors are holding back some allocations.

If you see the news, some large investors like the University of Texas endowment fund are also cutting back allocations to private markets.

Investors are more selective in what they want to invest in.

The tech start-up space is facing tough times, because they are no longer in a cheap money environment.

Within private equity, we like certain secondary strategies, where the play is with lower valuations.

We also see demand for growth-stage tech plays in Southeast Asia and the mid-market space in Australia is also in demand. Meanwhile, other markets like China are out of play for many clients.