Funds & ETFs: Saxo Markets and Lion Global offers low-cost dynamic portfolio built with ‘Asian lens’ World’s biggest wealth fund strikes a milestone green deal
Leading brokerage Saxo Markets and asset manager Lion Global Investors (LGI) have joined hands to introduce a multiasset managed portfolio that claims to practise the art of fund selection with an Asian lens. The managers behind this product, dubbed the LionGlobal Dynamic Growth: Asian Perspective Portfolio, promise to actively identify assets with higher returns and growth opportunities, using low-cost ETFs and best-in-class actively managed funds.
“Global market indices are heavily skewed towards developed markets in terms of how portfolios are constructed and how much weight is assigned to [products from] the US, Europe and Asia,” says LGI’s CEO Gerard Lee, whose firm is part of the Oversea-Chinese Banking Corp group.
Typical portfolios available in the market allocate 40% to the US and 40% to Europe, and the allocation to non-Japan Asia tends to be low at around 10%, says Adam Reynolds, APAC CEO of Saxo Markets.
In contrast, the Asian Perspective portfolio is meant for investors yearning for a bigger exposure to the growth potential of Asia and emerging markets, but also with the appetite to stomach more risk, he notes.
“Saxo’s technology facilitates investing in multiple fund providers and combined with LGI’s expertise in asset management, we are excited to be offering investors a well-curated product to diversify their portfolios,” adds Reynolds.
With Saxo’s advantage of seeing investors’ investment habits, based on the transactions made on its trading platform, Lee believes the portfolio can better cater to sophisticated investors.
Yet, being sophisticated does not equate to being expensive. The Asian Perspective portfolio, which incurs a service fee of just 0.25% per year, is available to investors in either Singapore-dollar or US-dollar denomination. They can either make a lump-sum investment of US$10,000 (about $13,400), or they can put in $2,000 for a start, and then follow up with regular contributions of at least $100 each time.
Portfolio composition
While this portfolio is built with an Asiancentric view, the managers behind it will scour the world for optimal returns, says Selvan Kumaran, LGI’s head of curated portfolios.
With over 80,000 ETFs and 20,000 mutual funds in the market, it may seem that portfolio managers are spoilt for choice. However, it is quite the reverse, says Kumaran, who explains that each fund or ETF is put through a stringent selection process before it is included in the portfolio.
The first step entails combing through public data of the individual funds or ETFs and assessing their relative returns against their stated benchmarks. Following this, the fund’s peer ranking and upside or downside capture are ascertained. This means looking at whether the fund’s performance is consistent with or inversely correlated to that of the market.
According to Kumaran, only 10% to 20% of funds are rated ‘A’ and make it past these rounds. To further sieve through these funds, the curated portfolios team interviews the fund manager to further understand their investment process, team dynamics and portfolio risk management.
Currently, the Asian Perspective portfolio comprises 60% equities, 30% fixed income and 10% in gold. As with all actively managed investment products, the portfolio is dynamic, which means the proportions can be changed by the managers in accordance to prevailing market conditions.
Currently, the Schroders Greater China Fund takes up a substantial weightage within the equities allocation. This fund meets investors’ appetite for a meaningful exposure to China’s growth sectors such as semiconductors and electric vehicles, says Kumaran. Over 90% of the fund’s investments are in mainland China, Taiwan and Hong Kong. This fund invests in other sectors such as consumer discretionary, information technology and financials too.
Other Asian-focused equity funds in the portfolio include the Goldman Sachs Asian Equity Fund and the Lion Global Japan Fund. To capture the high returns from the fastgrowing technology sector in the US, the portfolio invests in the BlackRock US Growth Fund as well, notes Kumaran.
In addition, the portfolio looks to bank on the restructuring of European companies through the Schroders European Special Situations Strategy Fund. A key contributor to these gains is expected to come from potential M&A activities there, explains Kumaran.
For many investors, fixed-income assets help form the bedrock of their portfolios. For the Asian Perspective portfolio, this role is for now fulfilled by the Pimco Global Bond Fund, which has a size of around US$16 billion.
Staying relevant
The LionGlobal Dynamic Growth: Asian Perspective Portfolio joins the list of managed portfolios offered via SaxoSelect, Saxo’s managed portfolio platform. Besides LGI, other Saxo partners include BlackRock, Nasdaq Dorsey Wright, Morningstar and Brown Advisory.
Incidentally, this is the second collaboration between Saxo Markets and LGI. Both companies had previously set up a business-to-consumer funds platform back in October 2019. Under this venture, LGI’s funds on Saxo’s platform are offered at lower costs and are not subject to sales charges or platform fees.
In recent years, the asset management industry has become livelier with new players such as robo-advisers, which are all competing by claiming to offer their products at minimal costs relative to traditional asset managers.
On the distribution side, things might get busier too with the impending entry of the likes of digital bank licensees such as the Singtel- Grab consortium, and Sea. Besides taking deposits and facilitating transactions, distributing investment products is another key area these new digital banks might want to go after.
These new players, leveraging non-traditional means of distribution, can possibly reach out to previously untapped market segments, and thereby create new avenues for the asset management industry to generate growth. As such, LGI’s Lee believes that these new players pose a greater challenge to relationship managers and remisiers in a traditional bank set-up.
To stay relevant in this digital era, Saxo’s Reynolds is looking to roll out a personalised wealth management platform that is tailored to individual investors’ needs. He is also looking to have more portfolios — like the one with LGI — that are based on varying risk appetites of different clients.
For LGI, Lee hopes to make the process for retail investors seamless, without “charging an arm and a leg”. To him, the best form of reassurance and flattery will come if a competitor works with another investment platform to offer a similar portfolio. E