SDX set to develop new structured hedge-fund like strategy in Apac
The Strategy Data Exchange (SDX), a re-branding of the Synpulse AMC gateway which made the headlines in Q4 2017 after partnering with UBS to spearhead its actively-managed certificates (AMCs) platform, UBS Neo, across Asia Pacific (Apac), is rumored to be pricing an Apac multi-asset strategy as an AMC in response to growing demand from clients seeking exposure to multi-asset portfolios and risk premia, SRP understands.
SRP could not determine if the underlying advisor was an Asian based global macro hedge fund, or a buy side product provider. It is rumored that both Morningstar and Blackrock could be lined up for the deal given their involvement in similar regional strategies.
A source close to the deal told SRP that the product is aimed at clients looking for exposure to different assets via a one-size-fits-all type of strategy.
"Investors are skeptical participants in today's market and don't feel comfortable with some of the different asset class valuations," said the source. "This global product will provide balanced exposure to equities, fixed income, commodities, and currencies and will aim at delivering consistent returns."
Given SDX founder Frank Troise's relationship with UBS, it is assumed that UBS would be the AMC issuer. UBS has made a significant investment in its AMC platform Neo, the bank's cross-asset investment banking platform.
The new product will seek to mimic Bridgewater's 'All-Weather' strategy which is based on the fact that no one can predict the future economic environment so it makes sense to prepare for any event that could impact any investments - inflation, deflation, rising economic growth or slowing economic growth.
Bridgewater's 'All-Weather' hedge fund strategy which has delivered 9.7% annual returns consistently over the last few years has over US$150bn under management and offers exposure to stocks (30%), long-term bonds (40%), intermediate-term bonds (15%), gold (7.5%), and commodities (7.5%).
In the past, BlackRock has launched similar strategies from a long only perspective using their iShares ETFs in conjunction with Morningstar as a strategic adviser for asset allocation. However, if the AMC's advisor is a global macro hedge fund manager, it is assumed that the AMC would have more underlying complexity and bear a stronger resemblance to Bridgewater's All-Weather strategy, according to the source.
In addition, given the breadth of the SDX manager library, there will be no shortage of underlying advisors for SDX to choose from for the new AMC. "Key will be investor receptivity to a successful strategy like All-Weather presented in a simple elegant form via an AMC," said the source.
Since its launch, SDX first lined up ten of the top fifteen asset managers for the SDX strategy library, the firm then partnered with the world's largest investment bank, UBS, as an issuer/manufacturer. "The only piece of the puzzle remaining for SDX to solve is a committed Apac distribution partner with a large investor base who understands investments, digital distribution, and the strategic challenge poised by platforms such as Ant Financial and Ping An," said the source.
Calls and emails to Troise who joined Aviva Digital Apac in November 2017 as head of consumer investment solutions & business development Asia, based in Singapore, were not responded by press time. Blackrock, Morningstar, and UBS also did not respond to requests for comment.