In conversation with Mark Konyn of Cathay Conning Asset Management

Mark Konyn is responsible for building an asset management business in Asia from scratch. It involves developing the appropriate relationships with potential clients, suppliers, regulators, the financial community and the various affinity groups that can influence Cathay Conning’s positioning and brand acceptance in the target institutional market.

Konyn: There are many lessons that I’ve learned in my 23 years working in Asia and over 25 years in the fund management industry. These lessons relate to different aspects of my current responsibilities and fall in to various and different categories.

Knowing where to start and where to spend time and resources in Asia can be challenging. Fortunately the lessons learned establishing RCM in Asia over almost 15 years stand me in good stead. I have a practical and working knowledge of how institutions regard service providers and I have an ongoing dialogue with many of the main institutional investors in the region that help me to understand the challenges they face currently.

Experience working in multi-national and international firms is critical here too. I sometimes explain to colleagues that part of my role is to help colleagues in other parts of the world understand some of the local issues and challenges at least to the level that I have an understanding. A great example was this very morning when three of my senior colleagues back in Hartford and I spoke on a conference call to assess a particular and potentially sizeable business opportunity that we have developed. Over the previous week we have exchanged many e-mails and have had many preliminary calls. I have also presented data and examples relating to the opportunity. On today’s call we jointly processed the information and placed the opportunity in context of Conning’s global business and aspirations. In a rather Asian way we reached agreement and decided on how to pursue the opportunity.

In fund management, the culture of the firm greatly influences outcomes. Potential clients can sense when visiting our office very quickly how we are equipped to meet their requirements and how well we work as a team. I’ve also learned the importance of starting as you intend to continue. This is in terms both of building business relationships and in setting standards for the quality of your work. Perhaps most critical is the absolute prioritisation of compliance - here there can be no compromise.

Ultimately when it comes to working together as a team in fund management it’s about alignment and behaving as a stakeholder. I’ve seen in the past when this has worked well to great effect and I’ve also seen when this is neglected and how the business can go stale. In Asia perhaps more than other regions, colleagues want an opportunity to develop their career and work in a fulfilling role where there’s growth and an opportunity to influence the outcome.

What are your ambitions for the industry and for investors?

Konyn: Investors face tough times currently and these are likely to prevail. Uncertainty, volatility and low returns have become the norm. Capital preservation is no longer a ‘nice to have’ but a requirement.

We’re able to introduce new strategies and asset classes that help clients address some of the challenges I have outlined. For example asset classes that are lowly correlated with the economic cycle and other assets are highly sought after. At Conning we have access to some of these newly developed strategies that can be placed alongside more traditional asset classes in a tightly controlled risk management framework. My ambition is to be known as providing reliable and robust solutions for institutional investors that address particular challenges and objectives - these in no way will be generic or cookie cutter.

How do you see the rest of this decade panning out economically and how should investors position themselves through 2020?

Konyn: Fortunately the decade is largely still ahead of us and I’m not so pessimistic overall. I see the next several years as a time of great innovation and resourcefulness. I also see a greater diversification of investment strategies used by institutional investors although recognise that professional fund managers will need to be smarter and work harder to achieve results.

The focus on greater specialisation will likely lead to a ‘thinning out’ in the industry. Strategies that can be relatively easily replicated will be very low cost - and here there will be no exceptions and no places to hide - the days of easy money are now gone and for those managing mutual funds margins will be normalised. The cost of providing pension investment will come under pressure in context of the returns that are being generated and sovereign wealth funds will continue to define the objectives in context of outcomes rather than benchmarks.

What are your views of the Euro bloc, will it still be intact?

Konyn: Ultimately the current regime has to change. Recent actions by the ECB suggest there is preparation underway to cope with a potential breaking up, at least in part, of the Eurozone. A so-called ‘balkanisation’ of some of the risks prevalent has made this outcome more likely. Remarkably, the euro has continued to maintain value and I do not view changes to the current system as wholly negative.

Do you see China’s economy still growing at 7.5%?

Konyn: The cyclical downturn is certainly being exacerbated by the slow external conditions. At the same time, the impact of the global financial crisis and the actions taken by the Chinese authorities immediately after have exposed certain systemic weaknesses in the economy. It’s therefore likely that sub-par growth will prevail for a sustained period. Is this a catastrophe? Certainly not. It does however mean the world will have to adjust expectations for a China growing at 6.5% rather than 9% and above. Encouragingly we have started to see a pick-up in investment in to the agricultural sector. This is critical if China is to address the impediment of structural inflation.

Will India be more attractive and accessible for foreign investors?

Konyn: Foreign investors need to see some structural reform on the supply side to be convinced the authorities are willing to adapt and change. The recent debacle in the power sector, problems with state-owned banks and difficulties foreigners have doing business in India are not isolated or unconnected examples. India has been a key destination for risk dollars in the past and will be again.