Fund managers series

Imas: Still shaping standards after 20 years

Mr Nicholas Hadow believes Singapore will continue to rise in stature as a fund management hub, backed by its strong financial and legal infrastructure, as Asian economies grow in wealth.
Mr Nicholas Hadow believes Singapore will continue to rise in stature as a fund management hub, backed by its strong financial and legal infrastructure, as Asian economies grow in wealth.ST PHOTO: JAMIE KOH

The latest in our series featuring fund managers and leading market experts focuses on the chairman of the Investment Management Association of Singapore (Imas), which celebrated its 20th anniversary last month. Nicholas Hadow reflects on the country's fund management industry and the challenges that lie ahead.

Imas was established in late 1997 amid the Asian financial crisis, and serves as the representative body of investment managers here.

Mr Nicholas Hadow, 62, who is also director of business development at Aberdeen Standard Investments, first came here from Britain in 1983 and began his investing career as a commodities trader.

Having witnessed the growth of Singapore as a financial centre, he remains positive about the outlook for the sector and has some words of advice for those who are starting out in investing.

Q Imas celebrated its 20th anniversary. What are its objectives, milestones and challenges?

A Imas was set up to represent the fund management industry, but also to improve professional standards and promote a better understanding of investment among Singaporeans. Twenty years ago, we had 10 members; today, we have more than 120 representing international and local fund managers.

It has been an eventful two decades with the Asian financial crisis, dot.com boom and global financial crisis. As an association, we have introduced a code of ethics and professional standards, as well as guidelines on corporate governance, advertising and transparency in fair valuation.

Last year, we launched the second edition of our guide called Introduction To Personal Investing. We now have four committees that look at all aspects of fund management, from managing risk to promoting education.

Q How has the industry changed over the past 20 years?

A It has grown significantly despite the market upheavals. Back in 1997, assets under management in Singapore stood at $125 billion. The figure has grown to over $2.6 trillion, with many more fund managers basing themselves here.

Q How optimistic are you about the industry and about Singapore as an asset management centre?

A Extremely. Wealth in Asia is growing faster than in any other part of the world, and we are ideally placed, both geographically and with a strong financial ecosystem to support this phenomenon. Singapore has a first-class education infrastructure, a sophisticated legal system, solid banking integrity and a strong rule of law, which make it a place where investors feel safe keeping their money. I see Singapore continuing to grow in stature as a fund management centre.

Q What fund trends are you seeing currently, and why are they popular with retail investors?

A Income strategies are very popular now - that's because of demographics. I am a baby boomer, and millions of us globally are reaching retirement age. Income is important for us to fund our retirement.

Lower-cost exchange-traded funds and passive investments have attracted a lot of interest as well. The more money that goes passive, the greater the opportunities that present themselves for active managers.

Q How have investors' needs changed in Singapore?

A The big shift is from ensuring financial survival during the early days of independence to becoming the wealthy outward-looking nation we are today.

Investors are now much more global in their views and exposures, and their aspirations have evolved. We want to send our children to universities overseas, we want to save for the better things in life, and we also want to save for a comfortable retirement.

Q What are the biggest challenges for investors in the current market?

A The most obvious ones, apart from the rather disturbing geopolitical environment, lie in how the effects of the past 10 years of quantitative easing and their subsequent unwinding will play out.

Q What should investors consider when navigating markets and saving for the future?

A The important point is to make your savings productive - in other words, put your money to work. After that, diversify - don't put all your eggs in one basket. Then, you need to calibrate based on your own risk appetite.

As a baby boomer looking to protect my nest egg, I find that my appetite for risk is much lower than it was 20 years ago. Then, I was trying to grow my personal savings, and I was willing to take risks for the upside potential offered.

For someone starting out in life, you can afford to take on more risk, but you must do it in an informed way. That's where education and seeking professional financial advice can be very important.

Q What is your outlook for the Singapore, regional and global markets?

A Every investor has his own view of the market, but I would say there is a positive outlook for emerging markets, with consistent growth in China and India. Europe is looking more attractive, as is Singapore, after two or three difficult years.

That said, all investors should expect that there will always be financial downturns, and most of us cannot tell you when they will occur. Our job as professional investors is as much about managing the down-side in difficult markets as it is about capturing the up-side.

Q How have you invested your portfolio? How do you manage it?

A Like many other people, I'm time-poor, so I get help from a financial adviser.

You should not be surprised to hear that I have a number of holdings that all have the name "Aberdeen" in them! Buying funds gives me some of the diversification that I want. In my business, getting compliance approval for personal trading is becoming increasingly onerous because of the obvious conflicts, so buying funds also eases this problem.

I'd say a key tip is not to chop and change too much - let time be your friend. That said, my portfolio has become more focused on income-generating asset classes such as bonds as I near retirement (not that I'm planning to retire just yet).

In the perfect world, you should try to make room for something fun in your portfolio. I have always had a fascination for vintage cars. Thirty years ago, I bought an antique Jaguar XK140 for £18,000.

That was a lot of money at the time for a young man like me (and I certainly wouldn't recommend putting all your savings into vintage cars), but its value has appreciated dramatically, and it has given me a great deal of pleasure along the way.

Q Do you have any investment tips to share with our readers?

A I can't stress enough how important diversification is. There are no easy answers, so don't be afraid to talk to a professional.

A version of this article appeared in the print edition of The Sunday Times on October 01, 2017, with the headline 'Imas: Still shaping standards after 20 years'. Print Edition | Subscribe