Searching for Asia's Next Alpha Generators | SALT iConnections Asia

TL;DR

Asia’s next alpha generators are experienced, driven managers pursuing long-term opportunities across distinct regional markets and strategies. The panel highlights Japan’s inefficient bond market, country-specific approaches in India and Korea, and technology opportunities in China despite property-market challenges. It also examines manager selection, talent retention, geopolitical risk, and the tradeoffs between investment platforms and independent launches. Read on for the panel’s practical allocation insights.

Transcript

good afternoon everybody and uh welcome to Salt eye connections Asia and our panel for the ongoing search for Asia's Alpha generators my name is Michael Denon Slater and I look after Asia Pacific for uh eye connections and uh I'm delighted to welcome you all here and if I might take a wee moment just to to acknowledge the the work of all the staff ... Read More

Key Insights

• 🌏 Multi-strategy funds have expanded rapidly in Asia, offering more opportunities for investors but also potentially corrupting talent in some cases.
• 🖤 Japan's bond market presents opportunities for generating alpha due to its inefficiencies and lack of competition.
• 😀 While China's property market faces challenges, other sectors, such as technology, offer potential investment opportunities.
• 🪡 Panelists emphasize the need to separate China from the overall asset allocation bucket to better assess risks and opportunities.
• 🌏 Talent retention and recruitment are significant challenges in Asia's investment landscape, driving the need for innovative approaches to support emerging managers.
• 🌏 The media portrayal of Asia, particularly China, in the West may not always reflect the full investment potential and opportunities in the region.
• ↩️ The panelists stress the importance of generating strong returns for investors, prioritizing both left-tail risk mitigation and right-tail opportunities.
• 🍉 Geopolitical risks, such as the US-China relationship, are a concern, but efforts to stabilize relationships and focus on long-term cooperation are expected.

Questions & Answers

Q: How are investors searching for Asia’s next alpha generators?

The panelists look for driven, passionate managers who can adapt to changing markets and survive multiple cycles. They also assess Asian markets separately, identifying opportunities such as Japan’s inefficient bond market and country-specific strategies in India and Korea.

Q: What qualities does HS Group look for in an emerging investment manager?

HS Group emphasizes drive, passion, resilience, and evidence that a founder can build for the long term. Its founders are often in their 40s, have experienced several market cycles, and have overcome adversity inside and outside the workplace.

Q: What is HS Group’s approach to backing emerging alternative managers?

HS Group provides long-term capital to experienced portfolio managers and teams starting new businesses. It has deployed $2 billion and says it grew these businesses from scratch to $8 billion over nine years.

Q: How does the CPPIB emerging manager program invest in hedge funds?

The program focuses globally on investing in, seeding, and accelerating new hedge fund managers. Since beginning in 2016, it has worked with 20 managers and invested approximately $6 billion across hedge fund strategies.

Q: Which investment themes does The Clock Group focus on?

The firm identifies four areas: global macro investing with a geopolitical angle, fintech venture opportunities, climate and sustainability, and China. Its China strategy is explicitly contrarian because many other investors are turning away from the market.

Q: Is China still investable despite its recent challenges?

The panel identifies serious challenges in China’s property market but still sees potential in sectors such as technology. It recommends separating China from the broader asset-allocation bucket so its risks and opportunities can be assessed more clearly.

Q: Where does the panel see country-specific opportunities in Asia?

Japan’s bond market is highlighted as a potential source of alpha because of inefficiencies and limited competition. The discussion also identifies potential for country-specific strategies in India and Korea.

Q: What risks and structural challenges could affect alpha generation in Asia?

The panel highlights talent recruitment and retention, changing market conditions, and geopolitical tensions such as the US-China relationship. It also stresses balancing left-tail risk mitigation with the pursuit of right-tail opportunities and strong investor returns.

Summary & Key Takeaways

• Panelists discuss their experiences and strategies in Asia's investment landscape, focusing on finding Alpha generators and long-term capital investments.

• They emphasize the importance of drive and passion in successful managers, as well as the need to adapt to changing market conditions.

• The discussion also highlights the opportunities in Japan's bond market and the potential of country-specific strategies in India and Korea.