At least one Asian manager is on LGT Capital Management's firing list as the company's chief investment officer, Christof Kutscher, tours Asia this week looking for a possible replacement.
The Liechtenstein-based investment company plans to interview around 20 managers in Hong Kong, Singapore and Japan. Companies already interviewed include Lloyd George Management, Income Partners, JF Funds and Schroders. LGT currently uses two managers for the Japanese market and one for the rest of Asia. They would like to have four in Japan and three in the rest of Asia.
"In Southeast Asia, we'd like to have at least three managers. But if we can't find them in this trip we would like to be able to find them in the next," says Kutscher. "We would invest the money possibly in index linked funds in the meantime if we can't find the managers who we believe can deliver the alpha we need."
LGT's $1.25 billion Premium Strategy GIM fund invests approximately $255 million in global equities, 16% of which is in Asia. The fund recorded a 2% loss in the 10 months to September 30, with emerging markets equities recording the highest volatility and second highest loss.
"Currently we're cautious about Asia but not overly pessimistic. We might up our allocation to Asia to 25% of the [global equity portion of the] portfolio. But what we as investors are frustrated about is that many companies here still don't care about shareholder value and don't follow corporate governance and compliance standards the way other developed markets do," says Kutscher.
Commenting on the quality of fund managers in Asia, Kutscher says they are "very smart people but many of them do not have the level of accounting and compliance standards that we require. It's very hard to find managers who are reliable and have good track records. But we are quite happy with most of the managers we have here." Except, obviously, the one who is about to be fired, whose name Kutscher declines to divulge.
GIM is a private fund with a minimum investment of $250,000.
