Corporate activity in Asia good source of alternatives
Increasing levels of corporate activity within Asia are good sources of alternative investments with the sector set to grow through the evolution of capital markets, according to a boutique fund manager.
While this sector will provide good sources to alpha and provide access to Asian equities, Pengana Capital, Absolute Return Asia Pacific Fund manager, Vikas Kumra said this approach is more sophisticated than standard equity plays but will continue for some time.
According to Kumra, Asian corporate activity such as mergers and acquisitions, restructuring and share buy backs would continue due to the development of capital markets which were being opened up to private investors and away from central government controls.
"Stock selection around specific events combined with market movements has generated modest returns but with an absolute return basis as we share the concerns of planners looking for alternative investments," Kumra said.
"We have found that absolute return has always had higher levels of demand off-shore compared to Australia but the level of interest in these investments is the highest I have seen in the past six years."
Kumra said investing into corporate activity provides a wider universe for investors with more change set to take place across South East Asia, North Asia and the Pacific regions with the investments not restricted to being market or sector specific but based around themes and events.
"Such a strategy works well when corporate activity continues and it will stay strong for the foreseeable future and offers another way to access Asian equities while offsetting some of the beta that is present in a pure equities play," Kumra said.
"Asia is characterised by fairly complex corporate structures built around families and listed firms with subsidiaries. However planned generational change is not taking place and this is creating opportunities for outside capital and investors to benefit from pending change."
AUTHOR
Jason Spits
Recommended for you
Having seen inflows of US$5.6 billion to its fixed income funds in the last quarter, Janus Henderson has closed on a deal with life insurer Guardian to secure funds to boost its product development.
One of Metrics’ four managing partners is to step back from the business next year, having worked at the firm since its inception in 2011.
VanEck’s Bitcoin ETF has amassed $290 million in assets in its first year, but the ETF provider has said financial advisers remain skeptical of the asset.
State Street has rebranded its State Street Global Advisors arm, which has US$4.6 trillion in assets under management, following a series of deals with financial services firms in recent months.
