Framlington sets sights on Asia
Framlington Group, a $6 billion boutique equities fund manager based in the United Kingdom, is making a push into sourcing funds from Asia-based clients, says David Townsend of the firm's international business development group. He was hired last summer from Scottish Life International specifically to create an Asian business, and has so far registered five funds with Hong Kong's Securities and Futures Commission (SFC), including a global healthcare fund registered in Luxembourg. The firm may consider opening an office in Hong Kong to assist distributors if warranted by business volume.
Among the firm's niches is a $1.5 billion healthcare portfolio managed by Caspar Rock out of London. "We don't seek to dominate a market like Fidelity or Invesco," Townsend explains. "We offer a niche for certain elements of a portfolio."
Townsend and Rock were in Hong Kong last week building distribution relationships for the funds. So for Framlington funds are being sold in Hong Kong through insurance wrappers such as Royal Skandia and Eagle Star (part of Zurich Group) and private banks such as Credit Suisse Private Bank and HSBC Republic. Townsend hopes to add more such channels as well as break into local retail banks.
He notes that, "Today, equities are not on the top of investors' lists," but believes now is a good time to try to build a reputation. "There's less noise in the market." By building relationships now, Framlington can be in a position to take advantage of improving markets later.
Nonetheless, Framlington faces the problem that local distributors don't know it. "The key is name awareness," Townsend says. "WeÆre still establishing our credibility." One thing helping the process is that HSBC owns 51% of the company.
The other 49% is owned by Munder Capital Management, a Michigan-based affiliate of Comerica Bank which runs over $50 billion of assets. HSBC's stake was initially held by French bank CCF, which HSBC bought. Framlington has a separate presence in Japan via this connection, as CCF had a relationship with Taiyo Life (which is now Taiyo-Daido Life) which also continues under HSBC ownership.
As business in Hong Kong evolves, Townsend sees Singapore as a natural second step. Although Taiwan and Korea are alluring, these markets are dominated by short-term trading, not by typical Framlington clients, which are long-term investors. In all cases, TownsendÆs main job is to convince distributors that Framlington is not a fly-by-night operation.
"A lot of fund companies will fly in and promise the world," he notes. "They use guerrilla sales tactics. Distributors want a long-term commitment with someone they can trust. And we need to spend time differentiating ourselves from our peers."