Hong Kong total plan, one-year performance
Principal Insurance
Can an insurance company compete with asset management firms – can it be a serious player? Yes, as this award affirms. For this category, many competitors sited their position with either Watson Wyatt or William M Mercer’s investment performance surveys. They also emphasized Hong Kong capabilities integrated with a global platform.
But Principal had a few nuances that we liked. One was an investment strategy that emphasized discipline and minimal trading, to keep transactions costs down. Another was its asset growth; its Long-Term Guaranteed Fund has become the most popular in its stable among local pension funds scheme members, and has accumulated over HK$1 billion.
Moreover, Principal’s total plan funds have been chosen not just by corporate pension clients but also by other institutional clients, including Bank of East Asia, Invesco, DBS Asset Management and Dao Heng Fund Management. The consistent performance by Principal has made its funds a valuable tool for other service providers for Hong Kong’s Mandatory Provident Fund scheme.
Hong Kong total plan, five-year risk-adjusted performance
Zurich Scudder Investments
This came down to a slugging match between Zurich Scudder (which has since been acquired by Deutsche Bank) and Fiduciary Trust (now a subsidiary of Franklin Templeton). Fiduciary boasts a consistent investment strategy, a stable team of pros and a massive in-house research capability. Both are venerable names in US asset management.
Zurich Scudder made an argument about “why we are skilled not lucky” that we liked based on the belief that there are global certainties or inevitabilities that should form the basis of investment. Among these are demographics, business cycles and IT-led deflation. Commitment to a coherent global fundamental research not based on sell-side pitches allows Zurich Scudder’s investment team to identify cycles, shortages and market anomalies ahead of the pack.
We’ve heard boasts from every fund house about global perspectives and capabilities. We found with Zurich Scudder the rare ability to spell out exactly what this means and how it works, as opposed to relying on buzzwords. All to often we hear from pension funds in the region how they find fund manager presentations too full of doublespeak or investment decisions that go against their original presentation. We suspect that Zurich Scudder’s clients don’t have this problem.
Hong Kong stable growth, one-year performance
JF Asset Management
It is a common occurrence to see a shortlist come down to JF and Schroders, the grand dames of Asian fund management. Indeed, JF was a strong competitor in several of our asset classes. It is in this one that we felt JF Asset Management truly excelled.
JF is Asia’s first international financial services group and has been investing in the Far East for over 30 years and was among the first to introduce member choice retirement schemes in Hong Kong, in 1989. This experience has given the firm unparalleled understanding about the needs and expectations of corporate pension schemes and MPF members in Hong Kong.
Although JF justifiably crows about its Asian roots, it is also now part of the JPMorgan Chase family and leverages a global asset management and research capability, with 5,000 company visits annually around the world. Its investment style is based around good old-fashioned fundamental research and recognizing clever ideas among its regional specialist teams, based in Hong Kong, Tokyo and London.
Investment consulting
William M Mercer
Selecting fund manager winners was hard; picking the best consultant was agonizing. Watson Wyatt made a strong case, and we were very impressed with some of its thought leadership on areas such as fund governance, the development of client extranets for pension funds and its growing focus on hedge funds, as evidenced by the work it did helping the Hong Kong Jockey Club enter alternative investments.
But Mercer convinced us with several points. First, it is to date the only firm to publicize a detailed analysis of the value it has added to clients through investment manager recommendations. And it was in Asia that Mercer’s impact has been greatest, with an average value added of 5.9% and an information ratio of only 0.9%.
Mercer has also been re-appointed to a three-year term by Singapore’s Central Provident Fund, its anchor client, and public records show that the funds selected by Mercer for the CPF outperformed other funds in the same asset class by 3.4% per annum net of fees.
Finally, Mercer successfully mobilized a slew of client testimonials, including multinational corporations (“Mercer’s advice has added substantial value to the investments of our tax qualified pension plan in Japan”) to leading Asian corporate plan sponsors (“we were impressed by the extensive research database built up by Mercer to facilitate their work and their analysis”).
Tomorrow we will announce the winners for Asian hedge funds for the following categories: Japan long/short strategy, Asia long/short strategy, all strategies and a rookie of the year award for a fund launched in 2001.
Awards are based on a combination of data supplied by Bank of Bermuda, Eureka Asia Hedge, Watson Wyatt and William M Mercer; by applications from nominees; and by the judgement of PensionsAsia’s editorial team. Decisions are solely those of PensionsAsia and are final.
