News > Asset Management

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>