Moving In: Asset Managers in Emerging Markets
Manulife Asset Management (Thailand) Co., Ltd.’s CEO, Tor Indhavivadhana, shares the reasons why they set up their own office in Thailand and their reasons for establishing on-shore trading.
Global Experience in a Local Context
We were able to apply our global investment experience and trading knowledge to our investment process, compliance and risk monitoring system in Thailand. We follow Manulife’s investment philosophy and stock screening process to manage portfolios and to identify both growth and value stocks which are qualified to be in our investment universe. For new products, infrastructure could be developed as fast as other countries do, e.g. foreign investment via a feeder fund. For investors, there are many investors who lack fundamental investment knowledge in the market.
Many investors are not long-term investors and will focus on short-term trading rather than portfolio diversification and asset allocation. Therefore, we would have to focus more on providing them with the investment knowledge on a continuous basis. If more complicated products, i.e. derivatives, structured and any other innovative products are launched, the development of market infrastructure and further investment education will be essential.
As an international asset manager, in what respects are international institutional investors better equipped to trade Thai markets compared with local buy-side?
We could have a more competitive advantage in respect of information over the local buy-side. As an international asset manager, we have ‘first hand’ information provided by our global team which should have no bias whereas the local buy-side would receive information from brokers who may advise and comment based on what is most beneficial to them at that moment. In addition, we have a wellestablished network of research, fed from our on-the-ground position which gives us timely discovery of investment ideas and ongoing monitoring of relevant developments as well as investment strategies.
What was the rationale for setting up an on-shore presence instead of remaining off-shore?
By setting up an on-shore presence we better understand local investment needs. The on-shore team can communicate regularly with clients and distributors and also monitor the markets closely. Then, they will be in the best position to know about market trends and local demand in such situations. From an investment perspective, a local presence gives us investment strategies using real-time information, insight into the market and policy from on-theground resources. Our investment teams are interconnected globally and communication flows between investment teams worldwide; we have a global perspective on companies, industries and securities supported by portfolio managers and analysts in each local market – this adds value to the investment process and fund performance.
In addition, we are updated in a timely manner if there is any change in market/company outlook or rules and regulations. Manulife believes that emerging markets are particularly inefficient and underresearched. Therefore, we believe that a consistently attractive, riskadjusted return can be generated in Asian equity and fixed income strategies by using a risk-controlled investment approach leveraging our extensive on-the-ground proprietary research and global footprint.
What is on your wish list for Thai markets: alternative investment products, regulatory reform, new technical offerings, etc?
Firstly, a deregulation initiative from the Thai Securities and Exchange Commission (SEC) regarding the investment limits into non-investment grade securities (currently 15%) in order to enhance returns for investors. The regulation should focus more on disclosure base. All information needs to be provided to our portfolio managers in order to enable them to make decisions similar to employees’ choice on the provident fund scheme.
Secondly, we would look for more long-term bond funds with a ‘total return’ approach (duration three-five years), as opposed to the current ‘buy and hold’ strategy for client’s investment choice. Currently, most Thai investors in fixed income funds have a very low tolerance for volatility of Net Asset Value (NA V) as these investors tend to come from the bank-depositors’ base. Therefore, the most popular fixed income funds are money market funds and interval funds (e.g. three months, six months, one year) which are similar to bank savings and fixed deposits and employ a ‘buy and hold to maturity’ More about strategy only.