Published by Asia Asset Management – 18th Aug 2017
Asian equities chiefs at two global firms are set to leave Hong Kong as Asia regional funds expect another grim year in net outflows, casting a pall over the city’s allure as a regional asset management hub.
Richard Titherington, chief investment officer (CIO) and head of emerging markets and Asia Pacific equities at J.P.Morgan Asset Management (J.P.Morgan Asset), is about to leave his Hong Kong base for the UK for the second time, according to sources, and confirmed by the company.
This comes after Robin Parbrook, joint head of Schroders Asian equity alternatives team, told contacts several months ago that he was moving to the UK, sources tell Asia Asset Management (AAM). Schroders confirmed the move.
The departures are occurring amid discussions of imminent cost consolidation programmes and strategy realignment looming at other global fund houses.
And they come even as their clients’ gatekeepers warn that their fund ratings may be penalised if the strategies are not managed locally.
“The remote management would be factored in to our ratings to a certain extent. We do prefer CIOs to be in the region they are overseeing,” Frank Cooke, senior investment consultant at Mercer Investments in Hong Kong, tells AAM.
Mr. Titherington is returning to the UK two years after he came back to Hong Kong to front the J.P.Morgan Asia Pacific (APAC) equities team in late 2015. He had previously been a resident of Hong Kong for 14 years.
At that time, he had described his return to Hong Kong as “like coming home and I couldn’t be more pleased”, and the company said his presence would unite the emerging markets and APAC team resources to clients’ benefit.
“Richard Titherington is relocating to London in late 2017 to rejoin his family. He will continue in his role as CIO of emerging markets and Asia Pacific equities team, and will continue to spend a significant portion of time in Asia, as a reflection of our ongoing commitment to the region,” J.P.Morgan Asset’s Hong Kong spokeswoman tells AAM.
“There are no changes to his portfolio management or managerial responsibilities,” she adds.
She denies Mr. Titherington’s latest re-relocation is made for cost-related reasons.
“Since Richard moved to Hong Kong, he has embedded on a series of changes that we generally see as a positive, and we will continue to keep an eye on them since we cover a substantial part of their equity strategies in the region from a research perspective,” says Wing Chan, director of manager research, Asia, at Morningstar.
Meanwhile, Ginie Lam, Schroders’ head of marketing for Hong Kong and China, tells AAM Mr. Parbrook is returning to the UK but that “he remains a central part of Schroders’ Asian equities team as he continues to manage the Asian alternatives product range in partnership with King Fuei Lee.”
Mr. Parbrook also currently manages the SISF Asian Opportunities Fund with Tony Hudson, a fund manager in the Asia equities team. Ms. Lam says Mr. Hudson will become the fund’s sole manager on January 1, 2018.
“It’s an eight-month transition period between Robin Parbrook and Toby Hudson. The investment objective of the funds will not change,” she says.
“Schroders has also taken the opportunity to revamp the investment team structure so it is now better aligned with those in other regions. The new head of equities, Alex McDougall, focuses more on people and business management which allow individuals like Robin to better focus on portfolio management,” according to Morningstar’s Mr. Chan.
Mr. Titherington and Mr. Parbrook are leaving at a time when investors are pulling out of Asia focused funds.
Equities funds running on Asia ex-Japan strategies registered US$871.6 million in net outflows in January-June 2017, following outflows of $999.62 million in the same period last year, according to data from the Hong Kong Investment Funds Association released on August 15.
The outflows in China equity funds have been particularly heavy – $931 million in the first six months of 2017, versus $629 million in the year ago period. The HKIFA notes that redemptions were the worst in June, following index provider MSCI Inc’s June 21 announcement that it would include China A-shares in its emerging indices.
“Business is rough out here,” says Janet Li, director, investments, Greater China at Willis Towers Watson.
Still, the movement of equity chiefs may not necessarily be a one-way street.
“For example, we notice that Fidelity’s Henk-Jan Rikkerink was recently relocated from London to Hong Kong and I won’t be surprised if we see more regional, or even global, investment professionals relocate to Asia or Hong Kong given the increasing importance of China – both onshore and offshore – within Asian equity benchmarks and in turn, Asia’s growing importance within the boarder [global emerging markets] universe,” says Mr. Chan.
“The comings and goings can be two-way. It’s up to each company’s individual strategy. There are a couple of global houses that would be moving their Asia teams to be based here (in Hong Kong) too,” Sally Wong, chief executive officer of HKIFA tells AAM.
