June 2017

INSIDE VIEW: Investors of the world, unite!

Globe_in_palmThe Association of Professional Fund Investors aims to attract new members and foster greater engagement in Asia. Three of its directors, Mussie Kidane, Jauri Hakka and JB Beckett, explain why. What does it take to be a professional fund investor in Asia? Today the very concept of professional fund investing remains novel, globally. It comes as no surprise to say that professional fund investors are amid a great period of change, upheaval, regulatory reform and technological innovation. What helps them through all of this is a sense of community, shared best practice and collective strength. Professional fund investors encompass a broad range of practitioners: investment consultants, multi-managers, pension managers, advisers, wealth managers and so on. To this end, the Association of Professional Fund Investors (APFI) was formed in 2011 to serve as a global body to create that sense of togetherness, to network, identify best practice and ultimately advance the profession for its members and clients. Advancement
Founded in 2011, the Association of Professional Fund Investors was created by and for its membership. It enables professional fund investors to share ideas, ensure best practices and network with their peers. The association is dedicated to the advancement of the interests of professional fund investors and voicing the collective perspective of its members concerning key topics and trends within the global asset management industry. At its core, APFI serves as a forum to drive the development and the exchange of global best practices in the areas of research, analysis, due diligence and selection of asset management products. APFI seeks to build strong collegiate relationships among its members through a global networking framework. APFI advances the voice and perspective of the professional investor to industry dialogues on product development, regulatory and distribution topics concerning the global asset management industry. APFI strives to enhance the competitiveness and overall quality of asset management products in the marketplace through its members continuously demanding exceptional quality from asset managers. Further, APFI seeks to ensure first-class client servicing, reporting and transparency from asset managers. APFI believes that the inclusion of the investors’ viewpoint is crucial to the sustainable growth of the asset management industry. APFI acts to ensure the continued recognition of the importance of professional fund investors and advance their role within the asset management industry. APFI is independent of commercial interests and is owned and controlled entirely by its members. Philosophy
There are some simple truths that APFI members see as central:
  • Funds are bought by professional fund investors, not sold to them.
  • Hot concepts are the basis for short-lived bubbles; APFI members seek to isolate funds and their managers that have sustainable investment merit.
  • A strong competitive environment for funds is crucial, of which open architecture is a key component.
  • A well thought-out, sophisticated approach to fund research is forward-looking and past performance is only a limited aspect of the selection process.
  • There is no ‘right way’ to analyse and select funds – APFI members utilise a broad range of techniques and methodologies.
  • Professional investors work most effectively in an environment of independence and objectivity.
On the go
The association’s recent activities include:
  • Launch of the DOOR global due diligence questionnaire initiative. See DOORfunds.com
  • Engaging Esma, the European regulator, on MiFID II, Ucits and Priips legislation
  • Engaging the UK’s Financial Conduct Authority on post-Retail Distribution Review rules, thematic reviews and consultations such as illiquid funds
  • Engaging trade bodies such as the Investment Association and the Transparency Task Force on areas such as cost disclosure and investment transparency
  • APFI London Summit, March, debating changes to fiduciary rules
  • APFI Fund Buyer Academy, Berlin, June, hosted by FundForum International
Hot topics
The association is discussing these main issues:
  • The technological threat to fund selection
  • Regulatory changes - the fiduciary challenge
  • Active versus passive funds, exchange-traded fund innovation
  • Increasing complexity, use of esoteric assets and hedge funds
  • Transparency, implicit trading costs, research costs
  • Ethics, social and governance – the professional fund investor’s role?
  • The changing role: advisory, wealth management, asset allocation
  • Professionalism, accreditation and training
  • Due diligence best practice across asset classes
Consequently, the APFI has already begun to build strong networks in the UK, Nordics and Europe. However our membership remains frustratingly lighter in Asia, Africa and the Middle East. The APFI has held events in both Hong Kong and across Europe to debate the regulatory and technological future of fund research. We believe that due to the uniqueness of Asian fund markets, professional fund investors in those markets can share insights to the benefit of APFI members globally, and in return enjoy the experiences of like-minded professional fund investors from other regions. The aim is shared global best practice. A great example is the multi-year global due diligence questionnaire (DDQ) project, which is rolling out in 2017 in association with our technology partner DOORfunds.com, co-founded by ex-APFI director Roland Meerdter. DOOR holds a unique relationship with APFI in that APFI inputs and endorses the template as part of the DOOR fund buyer guidance panel. Professional fund investors joining DOOR are automatically enrolled to APFI free of charge. DOOR itself remains free at point of service for APFI members and is therefore a significant member benefit for professional fund investors in an era of growing cost austerity. The APFI seeks to be at the forefront of technological change within professional fund investing, and seeks other technology and training partners to discuss the direction of the industry and opportunities. More crucially, the APFI is calling on professional fund investors in Asia to become engaged, to lead APFI initiatives in the region, to be spokespeople, build membership, engage trade bodies, regulators, fellow professional fund investors and champion professionalism in fund investing in Asia. This is an opportunity to get involved with a growing professional body that is on the cutting edge of our field. It is an association, created and run by professional fund investors, for professional fund investors. Asia, we are calling you! Mussie Kidane is founding director, Jauri Hakka is Nordic director and JB Beckett is UK director at the Association of Professional Fund Investors 2017 funds global asia

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