News > Asset Management

Sequoia, Legend back Baidu’s online education platform
<p>The Chinese internet giant Baidu is about to spin-off its “after school” education platform Zuoyebang, attracting investments from two of the world’s largest venture capital firms.</p> <p>According to TechCrunch, Zuoyebang has just completed a Series A funding round with Sequoia China and Legend Capital, though how much the two invested into the former student Q&amp;A site is currently unclear.</p> <p>It’s probably a lot though. Zuoyebang reportedly boasts 50 million registered users, 3 million of which use it on a daily basis to rifle through the 950 million questions and answers the platform currently has on file. It can also be used within 113 schools around China, a huge plus against Tencent and Alibaba in the current war for control over China’s online education market.</p> <p>This isn’t the first time Baidu spun-off one of its subsidiaries; Baidu Takeout Delivery raised $70 million from the Japanese noodle chain Ajisen Ramen and the Chinese private equity firm The Hina Group earlier this year, while 91 desktop – Baidu’s desktop theme app – was also purged from the mothership in a move widely seen as a promotion of the startup culture.</p> <p>This is what they had to say regarding the spin-offs:<br /> “This strategy aims to promote the independent quality assets, and to foster Baidu’s open ecosystem.”<br /> Photo: 드림포유</p>
NexAmerica People Moves: Northern Trust adds to Canada team; BlackRock alpha strategies head to retire
Asset Management
<p>Northern Trust added institutional sales v.p. Nick Petruccelli has joined Northern Trust for the newly created position of senior v.p. for institutional sales in Canada. Petruccelli will be responsible for building the custody and asset servicing business with pensions funds, endowments and foundations. Petruccelli most recently worked as head of sales and business development at Larsen &amp; Toubro Infotech. Pensions &amp; Investments</p> <p>BlackRock alpha strategies head to retire. Quintin Price, the lead behind the $944 billion alpha strategies group, will retire next year. Price will return to London, and will continued to work with the firm as senior advisor through next summer. The 54-year-old Price has been with the firm since 2005, and has led the alpha strategies group since its start in 2012. Reuters</p> <p>Nikko Asset Management hires institutional business head. Nikko Australia hired Eddy Schipper to the newly created role. Schipper previously worked as executive director of Asia Pacific investor relations for IFM Investors. Investor Daily<br /> Photo: ©iStock.com/ooyoo<br /> &nbsp;</p>
The China survival guide: Foreign funds change strategy
Asset Management
<p>As China’s markets are consumed by panic and paranoia, foreign investment funds are in a scramble to switch their strategies and generate some upside from the chaos, or at least mitigate some of their loses.</p> <p>According to Reuters, there have been range of responses to the implosion. Here are a few of the strategies funds are adopting to survive the rout:</p> <p>Looking to Hong kong. Those who still remain bullish on China’s long terms prospects are now looking for more opportunities in the territory where valuations are lower. Another main attraction is that the market is better regulated and less subject to whims of Beijing officials than Shanghai and Shenzhen. </p> <p>Shorting Asian currencies. While the bearish sentiment on Asian currencies has eased recently, those that still see the decline in the yuan, and fall in national exports, as a precursor to more economic pain down the line are betting against the currencies of China's Asian trading partners.</p> <p>Shorting banks with heavy China exposure. Many of the same pessimists going short on Asian currencies are also banking on the decline of those with massive China exposure, particularly UL-headquartered banks like HSBC Holdings, and Standard Chartered.  </p> <p>Buying US mortgage-backed bonds. Some are investing in this area in the expectation that the wealthy Chinese looking for a safe haven will pull capital out of China and pour it into US real estate.</p> <p>...or just staying focused on China. Instead of fleeing the mainland completely some are just becoming more targeted. Fidelity Investments, for example, is seeking value in specific high-growth business, particularly in the consumer space, that were undervalued even before the meltdown.<br /> Photo: Lwp Kommunikáció, Bear Grylls Ventures</p>
Pimco's Total Return is not the fund it once was
Asset Management
<p>Oh how the mighty have fallen. Data disclosed on Wednesday reveals Pimco’s Total Return Fund has now sunk below the $100 billion mark to $98.5 billion - a third of its size just two years ago.</p> <p>The shriveling titan has now chalked up 28 consecutive months of outflows since April 2013 when it peaked at $293 billion.</p> <p>The departure of co-founder and "Bond King" Bill Gross - who shocked the investment world by shimmying over to rival Janus Capital last year - has not helped.</p> <p>The last time the fund was this small was in 2007 before it attracted mountains of cash from investors clamoring for the safety of bonds in the wake of the financial crisis.</p> <p>On plus side the outflow has slowed. The firm said investors yanked around $1.8 billion in assets from the fund in August, compared to $2.5 billion the previous month.</p> <p>The hemorrhaging is nowhere near as bad as it was in January when the fund had cash withdrawals of $11.6 billion. The fund has also delivered returns of 0.72% so far this year, beating 85% of its category peers, Reuters reports.<br /> Photo: Eli Christman</p>
Shanghai Chaos Investment loses millions on…Shanghai chaos
Asset Management
<p>Shanghai Chaos Investment, arguably one of the coolest-named asset managers currently out there, ironically got caught in Shanghai’s chaos the past few months.</p> <p>According to Reuters, two of firm’s funds posted serious losses since the Shanghai Composite’s mid-June peak. Chaos Value 1, the firm’s $17.3 million 20-year fund, lost a staggering 63% during that time frame, while Chaos Value 2, an open-ended, $440 million fund, lost a whopping 33%. Reuters does add however, that the former is still up 50% since its July 2014 launch.</p> <p>The funds apparently took a beating when commodity prices – as well as stock index futures – plummeted alongside the Chinese equity markets.</p> <p>The firm does seem upbeat on their prospects though:<br /> “Excessive panic after the market slump is a huge risk, just like excessive optimism was during the market surge," Chaos said in the letter. "We have opportunities to buy those equities that match our values at low prices.”<br /> Photo: John Koetsier</p>
Direct fund sales surge in Asia
Asset Management
<p>Banks are having a tough time. They are pilloried by the public and punished by regulators, but the biggest threat to their prosperity is technology.</p> <p>Already challenged by online payment platforms and alternative lenders, banks are having another source of reliable income eroded. They can’t count on the fees they’ve collected for years from selling mutual funds. Instead, more and more people are dodging the middleman and investing directly online.</p> <p>The shift is well-established in the UK, and now momentum is picking up in Asia, writes AsianInvestor. Banks had a 63.3% share of mutual fund sales in 2012 and 59.9% in 2013, but by the end of 2014 it had dropped to 48% in the region. Meanwhile the slice of the pie grabbed by direct sales grew from 10.9% in 2012 to 12.4% in 2013 and swelled to 16.2% last year, according to a report by Cerulli Associates, a leading research firm specializing in asset management and distribution analytics.</p> <p>“There is a global trend towards robo-advice, business-to-business platforms and, more recently, direct-to-consumer platforms,” it concluded.</p> <p>Commissions – in plain language, bribes – are paid to banks by the big asset managers to distribute their funds and give them a marketing edge over rivals. Clearly there is a conflict of interest, as a salesman is unlikely to misalign his investment advice with an easy payday.</p> <p>But, the public really aren’t mugs when given a choice. In China, Tianhong Asset Management partnered with Alibaba’s payment system Alipay to launch the Yu’E Bao money market fund in June 2014. It was the country’s first internet fund and now Tianhong has more assets under management than any of its competitors.</p> <p>Elsewhere, regulators are pressing the advantage home that technology can give them over powerful banks. The Australia Stock Exchange-led mFund Settlement Service allows investors to buy and redeem units in unlisted funds directly through a stockbroker, Fund Online Korea is an online supermarket that offers 900 products with low-management fees and it won’t be long before Hong Kong has its own platform in place.</p> <p>In the past, banks lobbied successfully for free-wheeling disintermediation in financial services and prospered mightily. It would be ironic if new technologies lead them to protect their own vested interests by lobbying for prudence.<br /> Photo: New York Playhouse</p>
96% of Chinese mutual funds were profitable in H1
Asset Management
<p>Here’s an interesting data point. According to Asia Asset Management, 2483 out of the 2593 registered mutual funds currently in China were profitable during the first half of the year.</p> <p>And not only that, the entire group apparently raked in a whopping $138 billion in revenue during the same time frame, almost $60 billion more than what the industry made in 2014.</p> <p>The three biggest winners appeared to be Shanghai-based China Universal Asset Management, which cashed in 46.7 billion yuan in earnings, the Deutsche Bank-backed Harvest Fund Management, which pulled in around 58 billion yuan in profits, while China Asset Management Co – otherwise known as China AMC – lorded above them all with an impressive 60.4 billion yuan in revenue.</p> <p>Granted, the Shanghai Composite did climb over 50% by mid-June, so even the most outright beta huggers should have came in deep in the black, but still, an impressive showing nonetheless.</p> <p>Everything kinda went downhill since that mid-June peak though, so it’d be interesting to see how the group fares during the second half. Unfortunately, Z-Ben Advisor’ Shichen Liu gave Asia Asset a pretty grim assessment:<br /> “Though [the] China Securities Regulatory Commission (CSRC) asked [the] China Securities Finance Corporation (CSF) and Central Huijin [Investment] to save the market, it [has] just simply slowed the drop of [the] stock market. However, [the] SHIBOR (Shanghai Interbank Offered Rate) (overnight)) has been increasing since July, which indicates that money market funds would have higher returns in the second half. The overall performance will still see a large decline compared to the first half [figures].”<br /> I wonder what happened to the 110 that didn’t make it, did they get caught by the sell-off? Curious what you guys have to say.<br /> Photo: Anthony Kelly</p>
DoubleLine Capital unveils new commodity fund
Asset Management
<p>Commodity prices have not been kind to its proponents lately. Glencore is in doldrums, so is Noble, while over in the U.S., Cargill has been forced to shut down one its commodity funds. A group of bond guys in L.A. however, seem to think that now’s the perfect time to launch one of their own.<br /> “DoubleLine Capital, the investment firm overseen by Jeffrey Gundlach, on Monday opened a new mutual fund to give investors exposure to commodities markets and help them diversify.”<br /> That’s right, DoubleLine Capital has just unveiled the DoubleLine Strategic Commodity fund, a fund that Reuters says will seek long-term returns through a variety of long and short positions on “commodity-related investments, including through the use of derivatives and leverage.”</p> <p>The portfolio manager appears to be Jeffrey Sherman, the long-haired wizard behind some of the firm’s derivative-based and multi-asset strategies, who had this to say regarding their new launch:<br /> “A broad mix of commodities historically has shown low correlations to stocks, bonds and cash. So commodities can diversify a portfolio invested in traditional asset classes…In addition, commodities can serve as a hedge against unexpected inflation. Finally, incremental returns potentially can be obtained by exploiting the term structure of prices of individual commodities.”<br /> As previously mentioned, now seems to be an importune time to be launching such a fund – could this be DoubleLine’s way of calling the bottom? These people are far from stupid, and there's no way they’d take the time to manage something that wouldn’t earn its keep.<br /> Photo: me and the sysop</p>