Edge Asset Management moves on Asia
22 October 2012
News, Asia, Global, USA, Europe
By Hui Ching-hoo
Seattle-headquartered Edge Asset Management is looking to make a foray into the Asian market after it initiated a road show for its equity income strategies in Asia in September.
The firm is affiliated to Principal Global Investors and had total AUM of US$20.9 billion as of September 2012. Jill R Cuniff, president of Edge Asset Management, told Asia Asset Management: “We’re excited about the Asian market given the overwhelming response our equity income strategy has received in the region. Principal Global Investors provides us with infrastructure including accounting, finance, and IT support, which will be important as we develop our presence in Asia.”
The equity income fund primarily invests in US large-caps that display commitment to pay and grow dividends over time.
“Edge’s business is 100% within the US. We expect the business base will be more diverse over the next two to five years,” she said.
Principal Global Investors (Hong Kong) head of institutional sales, North Asia, Helen Chang noted the firm has helped its boutiques to tap into Asia. “The firm has operated its multi-boutique model for years by which it has a wide array of affiliates with different expertise. For example, we have boutiques which are mainly focussed on traditional/unconstrained equities, traditional/high yield/preferred fixed income, real estate, currencies and hedge funds. We provide distribution and local client services in the Asian region to our boutiques.”
According to Ms. Cuniff, the firm has strength in bottom-up security selection and fundamental analysis.
The global market environment is very choppy, she notes. Significant capital has flown out of equities, though equity income strategies remain in demand, gathering significant capital inflows. In addition to retail platforms, Edge is talking to a variety of investors, including sovereign wealth funds and pension funds in Asia and Europe. They are looking for long-term equity strategies that provide good income and the potential for capital appreciation.
She adds that investor risk appetite has been very conservative. For example, the portfolios of many private wealth investors held in European banks are 40-50% cash, she says. “Although a lot of capital has been flowing into fixed income, we believe investors are becoming more comfortable with returning their investments back into equities. Equity income strategies are effective tools in bridging the capital flows from fixed income back to equities.”
Ms. Cuniff notes the importance of QE3. The Fed is pumping vast amount of liquidity into the market, with the desired impact of increasing jobs. From an equity perspective, a fundamental understanding of risk is required to navigate in the current environment. “We believe the winner is the one who is thinking hard about their business model and doing the right thing from the cost control standpoint, while taking market share from their competitors. Our job at Edge is to find the winners that will perform over time for our investors.”
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