London-based global manager Man Group has launched a high-conviction Asia ex-Japan equities strategy following the recruitment of Andrew Swan from BlackRock and a small team to be based in Sydney and Hong Kong.
Swan, who spent the past nine years running, at first, BlackRock’s Asian fundamental equities strategies and then Asian-plus-emerging-markets funds, has focused on the region since the 1990s, spending 17 years as an analyst at J.P. Morgan prior to BlackRock. In his new role, which he took up in August, he is returning to Sydney from Hong Kong.
The manager of the new strategy is Man GLG, the discretionary investment management ‘engine’ for Man Group. The group has a large Australian presence representing, predominantly, the firm’s various alternatives strategies and operating subsidiaries. It also has a retail distribution arrangement with GSFM.
The new fund, which is agnostic in its choice of structure for clients, is highly active – with an active share of about 70 per cent and active risk of at least 4 per cent. It is aimed at taking advantage of the expected outperformance of Asian equities in the near future.
“A lot of developed markets are more highly correlated,” Swan said last week (December 2). “The world has pivoted. It is different now. It’s less about global integration as people have become more inward looking. People have adjusted. The good news is that we are 18 months down the road. I don’t think it matters who’s in power. I think it’s a natural progression and people have adjusted.”
Sydney-based Hersh Gandhi, who has been with Man for about 17 years, heads up distribution for Asia Pacific. He said Man would pursue multi-distribution channels with the new strategy and will be able to wrap it up into different formats, such as mandates, to suit different clients.
The investment professionals assembled include analysts Anand Agarwal, Sally Chan, Andrew Hill and Alethea Leung. Agarwal, also from BlackRock’s fundamental Asia and emerging markets team in Hong Kong, will continue to be based there, as will Leung, another BlackRock analyst, and Chan, formerly at CLSA in Hong Kong researching internet and telecoms opportunities. Hill, based in Sydney, joined from UniSuper where he focused on unlisted investments and financials and healthcare.
The strategy is style neutral, with most of the risk being taken at the stock level. Swan believes that a lot of people make the mistake of thinking that because of Asia’s high GDP growth it will necessarily deliver high investment returns. “But Asia [as a whole] has underperformed for a long time. The reason is that there has been little profit growth despite GDP. Asia tends to be highly inverse correlated with the US dollar… For me, it’s always been about why we want to buy a business.”
He said the strategy was focused on what it took to be a top-decile manager, which is an ambitious target to achieve consistently. “I have been a top-decile manager in the past,” he notes. “We are trying to deliver excess returns through the cycle.”
The new strategy invests across the range of stock capitalisation, with a slight tilt to mid-caps over time. On a sector basis, it is expected to be plus-or-minus 20 per cent against its benchmark MSCI Asia ex-Japan index. Boston-based Man GLG had US$27.3 billion (A$36.9 billion) under management as at September 30.