AsianInvestor’s marquee award winners (part 1)
Every year, AsianInvestor's editorial team conduct an intensive analysis of the region's leading asset management service providers, fund products and asset managers, to ascertain the top organisations of the previous 12 months.
The winners of these categories must combine a mixture of business performance, growth and progress, measured on both quantitative and qualitative criteria.
Below, we detail why we chose this year's winners of the first section of our marquee awards, which comprise the leading private bank, asset service provider, and fund houses in various areas of investment concentration.
BEST PRIVATE BANK
Credit Suisse
The Swiss private bank has continued to build on its impressive regional growth, as it seeks to benefit from the broader group’s strategy to cater to both the corporate finance and investing needs of the region’s leading business owners.
Credit Suisse possesses a relatively unique setup among its international banking peers. Asia is a largely autonomous entity, which has enabled it to operate in a manner that best meets the idiosyncracies of the region, and means it can make decisions faster. It’s meant the banking group has been able to more rapidly authorise financing lines to favoured business clients, or support them via cooperations or business partner introductions.
That has helped the bank drum up investment banking deal flow from family-owned businesses, and has also left these clients well-disposed to allocate some of the wealth they amass with the Swiss bank. The idea of a private investment banking model isn’t new, but Credit Suisse is arguably further down the road in successfully having rolled it out than any other institution.
The result is that Credit Suisse’s private banking arm has continued to build its assets under management in the region; its relationship managers are believed to have added AUM in the double digit billions during 2018, with the bank now sitting on an estimated regional AUM of $205.1 billion at the end of 2018, according to data from Asian Private Banker, making it the second-largest private bank, after arch-rival UBS.
That’s only a smidgeon above the $202.1 billion it recorded at the end of 2017, but given that most of its direct rivals saw their year-on-year AUM drop during a terrible final quarter for asset performance, it was still a pretty good result.
Perhaps worryingly for its rivals, senior executives are Credit Suisse think they can do more to more seamlessly combine private and investment banking services. “Others talking about combining private and investment banking, and they’re only about 1.5 out of 10. But we’re only at 5; there’s a lot more we can do,” said a senior executive at the bank.
BEST ASSET SERVICES PROVIDER
HSBC Securities Services
As one of the region’s largest banks, HSBC has a certain advantage when it comes to offering asset services. It has an enormous number of corporate relationships across the region, and these extend well into the investment industry.
The bank possesses assets under custody of $2.93 trillion, an impressive amount. And it has been actively seeking to build its business too, particularly in relation to investment flows to and from China. HSS enjoys a strong level of support for Stock Connect between Hong Kong and China and was a first mover to support the new Shanghai-London Connect. HSBC Securities Services believes it will be ready to support the first depositary bank once it launches. In addition, it has rolled out One Custody, a core infrastructure for settlements and corporate actions, that has also helped progress the bank’s capabilities.
HSS now boasts assets under administration of over $500 billion in the region, a large amount of which relates to Chinese assets in the country’s inbound investment scheme. In addition the bank has launched a China Insurance Custody product, which enables it to be an onshore custodian and overseas global custodian for local insurers that are also qualified domestic institutional investors.
While this was not particularly useful in 2018 – Beijing pulled the shutters down on additional capital outflows from investors – it sets HSS up well for when China’s insurers are permitted to once again start investing more offshore.
Other areas of note include HSS gaining some asset owner mandates such as a large Singapore statutory board and a set of life insurer mandates across the region. Combined, they underpin HSS’s general strengths as a custodian for mutual funds, cross border flows and asset owners.
BEST BUSINESS DEVELOPMENT
Allianz Global Investors
It’s not one of the biggest global investors in the region, but Allianz Global Investors has made good progress building its regional business out, during a tricky year.
The fund manager ended the year with regional assets under management (AUM) roughly 5% higher than it had a year earlier. Given the generally poor markets during the fourth quarter, the net growth was down to Allianz GI enjoyed good inflows of new funds from regional investors. It particularly did so among its high margin products, as well as with its income and growth funds.
Allianz GI has enjoyed particular strength in Taiwan, where it was ranked that third-largest international asset manager by AUM at the end of last year. In addition, it was the second foreign asset manager to gain a wholly-owned foreign enterprise licence and is was among the first two offshore fund houses to gain a qualified domestic limited partnership (QDLP) licence once the programme was revived last year too. QDLP licences allow fund managers to raise local funds from institutional and high net worth investors to invest in offshore traditional and alternative investments.
Other areas of growth include Allianz GI launching a Singapore-based private credit capability in Asia last year, which enabled it to add multi-asset capabilities. Plus, Allianz GI has recognized commitment to environmental, social and governance (it received an A+ report card for 2018 by United Nations Principles for Responsible Investment), and registered a green bond fund in Taiwan, while enabling distribution of a water fund in Singapore.
In addition, it finalised Project Capstone in Asia last year, which helps it cut costs and improve shared investment solutions. All of this leaves Allianz GI relatively well placed to keep building its business through 2019 and beyond.
BEST ESG STRATEGY ADVISER
BNP Paribas Asset Management
As one of the original founding members of United Nations Principles for Responsible Investment (UN PRI), BNP Paribas Asset Management has long placed sustainable investing at the heart of its activities.
It applies various environmental, social and governance (ESG) investing approaches across its entire $455 billion of assets under management (AUM). It also doubled the headcount of its Sustainability Centre to 25 members, while adding to its teams covering stewardship, climate change, ESG bonds and analysis.
In addition to overlaying ESG criteria over all its investments, BNP Paribas AM also offers specialist mandates to investors. In Asia the fund house had well over $1 billion of specialist socially responsible investing strategies as of the end of 2018, up over 40% versus the previous year. This included a dedicated ESG mandate for an Asian pension fund, as well as thematic environmental funds being distributed through private banks and fund distributors.
In addition, BNP Paribas AM was the first firm to offer a ESG-focused fund via the qualified domestic limited partnership scheme in China, while allowed local high net worth investors to access the firm’s international water equity strategy.
The asset manager has been seeking to disseminate knowledge of ESG into the region’s investment community. One means of doing so has been via a ‘gameshow’ that it created with the CFA Institute, which is designed to let staff and clients play and learn about sustainable investing in an interactive, entertaining manner.
In addition, the French fund house hosted its third Sustainable Future Forum in Singapore, attracting over 400 delegates, it joined the Asia Investor Group on Climate Change, and was a participant in the launch of the Hong Kong Green Finance Association in September 2018. BNP Paribas AM, it’s fair to say, takes ESG very seriously.
BEST PASSIVE MANAGER
CSOP Asset Management
The winner of our best China offshore fund house award is also recognised for its exchange-traded fund (ETF) efforts in our new, passive manager category.
CSOP Asset Management is a fund manager that has been eager to expand the type of ETF products available in Hong Kong. It mixes populism and trendiness (coming up with new thematic ETF products as certain themes come into vogue) with evergreen products. As of the end of 2018 it had 24 ETFs and exchange-traded products, mostly listed in Hong Kong but also internationally.
This flexibility proved particularly useful last year, when CSOP combined existing products with new launches to capitalise on the volatility and uncertainty that began to prevail in markets, particularly in the second half of the year Of particular note last year CSOP registered HK$3.3 billion of inflows into its new Hong Kong dollar Money Market ETF, which tracks and invests in short-term debt. The ability of the product to offer a certainty of return attracted investors eager to gain reliable income.
That success led CSOP to launch the US dollar Money Market ETF on the Hong Kong Stock Exchange, which launched with an initial investment of $55 million. Meanwhile CSOP registered almost $500 million of new fund inflows into its Hang Seng Index inverse ETF, as investors sought a means to capitalise from falling markets.
Other successes included CSOP’s Global Asset Momentum Allocation strategy, Hong Kong’s first quantitative passive investment vehicle that gained HK$4 billion within two months of its launch. Meanwhile, the fund manager retained its title as the largest renminbi qualified foreign institutional investor ETF manager, with its CSOP FTSE China A50 ETF experiencing over $300 million of inflows following index provider MSCI’s inclusion of some A-shares into its indexes in June 2018.
All in all, CSOP weathered a trying year well, thanks to its breadth of products, proven market capabilities and willingness to innovate.
This story was updated to reflect Allianz Global Investors was among the first two foreign fund houses to receive a QDLP licence in China last year.