KUALA LUMPUR: Investing opportunities are becoming more visible as global financial markets return to some semblance of stability post-crisis, said the CEO of a local asset management company.

While the financial landscape was far from being entirely transparent, it had improved significantly from a year ago, CIMB-Principal Asset Management Bhd chief executive officer John Campbell Tupling told The Edge Financial Daily in an interview.

“We no longer feel like we’re digging ourselves out of a hole,” he said of the change in the financial landscape over the past one year.

“I remember thinking then that things couldn’t get any worse, but guess what? It got worse! (The uncertainty) got to the point where you didn’t know what was going on.

“We (fund managers) deal with uncertainty but there was so much uncertainty that the normal rules didn’t apply. So the issue was how to handle that kind of situation, particularly what you do for your clients,” said Tupling, who was appointed the top job at CIMB-Principal on Nov 1, 2008, just as the crisis was battering the Malaysian market.

To put the comparison in perspective, the then-benchmark index of the local stock market, the FTSE Bursa Malaysia KLCI, averaged 882.33 points for the month of November in 2008. The benchmark FBM KLCI averaged around 1,267.22 points this month.

In another example, the Chicago Board Options Exchange VIX index, a popular measure of volatility, hit its all-time high of 80.86 points in November last year. It has moderated into the more manageable 20-something point region at present.

Investor sentiment has also improved considerably, judging from the increase in CIMB-Principal’s assets under management (AUM). The asset manager has grown its AUM to RM21.3 billion, divided almost equally between retailers and institutions, as at Oct 31 from RM16 billion earlier in the year.

With the improved clarity in the financial landscape, funds are now able to analyse trends and make predictions of trends, which is a vast difference from the situation a year ago.

CIMB-Principal adopted a “reasonably defensive” position at the start of the crisis — holding on to more cash and revisiting the credit ratings of corporate bonds — but Tupling said the fund managers did not do a 180-degree turn in their investing strategy. Balance and discipline, he said, were essential.

“Because whenever you get those downturns, there are opportunities to be had and the key is to be ready to take those opportunities when they come,” he said.

“As long as you maintain your long-term consistency in your process, you’re going to be able to respond well to the downturn and the upturn, and we are confident the way our fund managers work does exactly that.

“Even at the height of the crisis, there were no massive redemptions of investments by institutions or retailers,” Tupling said. “It just didn’t happen. People were saying ‘No, I’m invested in it, it might be longer term than I had hoped but I’m holding onto them’.”

Demand for new products, particularly more aggressive ones, was nonetheless muted, although that has started to improve. Investors are understandably still wary about investing even as they begin to venture out from the safe confines of their savings accounts and money market instruments.

“We’re starting to see some pickup, but it’s not at 2007 levels,” Tupling said. CIMB-Principal was one of the first asset management companies to launch a retail fund in 2009, the CIMB-Principal Opportunistic Bond Fund, which to date has grown to RM67 million and yielding about 10% in return.

Like most other investment experts, Tupling does not believe that the post-crisis investment landscape will return to its pre-financial crisis shape.

When the floodwaters finally recede from the financial storm, Asia, the story goes, will emerge as the new global driver of economic growth.

“It will be a different story compared to the story before the crisis. Asia is a lot more at the forefront. China will be a driver of growth, but you require the other Asian economies to be a part of that story, and of course India, which is absolutely critical,” he said.

CIMB-Principal presently manages two China-themed retail funds, one of which is an Islamic fund and the other a conventional fund.

The importance of Asia has certainly not been lost upon its parent company, CIMB Group Holdings Bhd, which has stepped up its plan to expand regionally by undertaking a proposed dual listing in Thailand.

CIMB-Principal, which is also working on setting up an office in Thailand, has similar regional aspirations, though Tupling said that it had been a part of the company’s DNA since its started in 2002.

CIMB-Principal has no plans to launch any more retail products for the remainder of the year, although Tupling said there would be two planned for January. He added that they would provide “some excitement” and were both based off-shore.


This article appeared in The Edge Financial Daily, November 30, 2009.