Teng Chee Wai, Managing Director of Affin Hwang Asset Management, speaks about embracing a different kind of philosophy to chart the course for this fast-growing wholly Malaysian-made fund management company.
By Helena Hon
If there is one thing investors acknowledge about Affin Hwang Asset Management Berhad (Affin Hwang AM), it is that they know they can always trust it to deliver.
That could be satisfaction enough for its Managing Director Teng Chee Wai, whose high premium on Trust, earned from ascribing to the company’s core values of Integrity, Teamwork and Excellence, has placed his company among the Top Five of the best performing investment management houses in Malaysia.
Affin Hwang AM’s impressive growth trajectory, from the early days of its inception, has been nothing short of momentous. From its humble beginnings in 2000 as a small entity managing just RM20 mil of local Assets Under Administration (AUA), the fund management company set up an Islamic fund management arm, launched a slew of products including the first shariah-compliant gold ETF in Malaysia, and as of 30 May 2018, successfully achieved an AUA of RM48.3 bil – a huge leap in size and depth accomplished by practicing a culture of excellence across their people, performance, practices, processes, products and services.
With a range of products covering not only unit trust funds such as equities, bonds, the money market, capital preserved, global, structured funds, feeder funds, Islamic equities, and cash as well as wealth management solutions for a clientele base comprising retail, corporate, wealth management agencies, government agencies and banking partners, Affin Hwang AM has in recent days, taken another step forward by entering the alternative investment space launching Bintang on 18 June 2018. Bintang is a Private Equity Management Company registered with the Securities Commission Malaysia and a subsidiary of Affin Hwang AM. Its formalisation marks the company’s first foray into the private equity space.
More is yet to come for this enterprising company and Affin Hwang AM’s vision and goal of growing to RM50 bil by the end of 2018 looks well within reach. On hand to share his thoughts and plans for the future of asset management as well as his views on the investment climate and the economy vis-à-vis the new government, Teng opens his mind to Smart Investor.
Smart Investor (SI): We understand you have been the managing director of Affin Hwang AM since Day One. Could you walk us through from the very beginning?
Teng Chee Wai (TCW): Affin Hwang AM started in 2000. Back then we were called Hwang-DBS Asset Management in Singapore. They had a very small operations of about seven staff. I came on board in January 2001. There were no clients, no assets, just an aspiration to start up asset management operations in Malaysia by Hwang-DBS’ founder − the late Dato’ Sri Hwang Sing Lue.
At the time I was working for Hwang-DBS and I was seconded over to do the business. I told them I didn’t know how to run a business. It’s not my acumen, it’s not what I am trained for because prior to that I was a fund manager, but I told them if that’s what the calling is, I will try. I took the challenge, I came on board and I learnt everything from scratch, such as: How do you run a company? How do you market the funds? How do you create a product? How do you build a team of people? How do you create a culture, and how do you sustain the growth of a business?
All these took me years of learning and a lot of reading on my own to understand how things work. Over time it has proved to be a very successful and rewarding journey and I have no regrets.
SI: Did you make mistakes along the way?
TCW: Lots of them. I made lots of mistakes, although if you look at the results we have achieved, it has been an amazing set of results. Looking at our AUM growth, we grew from 2001 and until last year, we were still growing, except in one year when we had the global financial crisis where we had a slight decline in AUM. But it was because of the global markets. Beyond that, we have seen growth from year to year. So there were many mistakes that we made along the way. But if you don’t try and make mistakes, you will never learn, and you will never grow. In this organisation, these are the things that define us.
SI: What’s the secret of your success?
TCW: Although most of us are professionals by nature, we take it upon ourselves that we run this business like we own it. The entrepreneurship that thrives in this organisation reflects the legacy of where we came from.
The late Dato’ Seri Hwang was an entrepreneur and he imparted the entrepreneurial spirit into this business. Today, we are very entrepreneurial in nature, we are known to be very innovative, very quick on our feet, very fast in coming out with products. When there are opportunities that come into the market place, we try to capture those opportunities, and that’s basically how we grow. If we try something and it doesn’t work, well, you just cut your losses and walk away.
SI: Is there a time frame that you apply to see if people or projects work?
TCW: My typical time for looking at the opportunities or projects is not short term. I believe everyone needs time not just to prove themselves, or develop the market. A typical time frame that I use is three years.
SI: How do you inspire passion in the company, how do you grow trust?
TCW: Passion comes from inspiration. I myself am very passionate about this business. Although I have spent many years in this business, tomorrow I can wake up and still be very fresh as far as this business is concerned.
I always say, when we manage this amount of money, it is a huge responsibility. One of the keystones that anchors our mindset is: “Don’t manage this money like other people’s money. Manage this money like your own money.”
Always treat our clients well. Respect the trust that they give to us because it is hard earned. Trust is something you can break in a very short time but it takes a long while to build that trust.
Our staff trusts us. I know that because to my amazement, our staff have put their entire life savings into our funds. The total amount now stands at RM100 mil. Collectively, they have put RM100 mil of their savings into our funds and every year it will increase by RM20 mil. But more than the amount, it reflects our staff’s confidence in what we do.
SI: In 2017, you entered into the passive investment space by launching the first shariah compliant ETF in Malaysia called the Tradeplus Shariah Gold Tracker. Why did you launch it and how is it doing so far?
TCW: Being the first is not very important. Our Muslim friends were always searching for instruments to deploy their savings and over time, I observed that gold is something that they are comfortable investing in. For years I have been pushing our guys to come out with a product that had physical gold backing it.
We had two options: We could have come out with the easy option of just teaming up with a third party overseas to do the job but I said, in Malaysia, we have to learn to do some things on our own. So I set up a team, we went through the learning process, it took them about two years to sort it out and finally they came up with a gold ETF manufactured by Malaysians. This is an ETF that requires us to buy gold. The physical gold is stored in the vaults located in a bank in Singapore at the moment. I felt good, not because it was the first gold ETF in Malaysia but because Malaysia did something on its own.
At the moment demand for investments in gold has tapered off because of rising interest rates. However, the market moves in cycles. There are good cycles, there are bad cycles. In bad cycles, people will look out for a safe haven and gold provides that safe haven. We are providing our client an alternative and today the fund has doubled up in size since we launched it. However, it is still not the optimum size we would like to see. But I am patient. When I look at a business, I look at it with a three-year perspective. I don’t believe in doing business for the short term. It takes time and I am patient with these things.
SI: Affin Hwang AM’s growth trajectory has been quite phenomenal. What were your strategies behind the growth and could you tell us a bit about your entry into the alternative investment space?
TCW: Three years ago, we drew a five to 10-year roadmap to where we are heading. Part of the roadmap required us to figure out the investment solutions we can provide internally. We have, over the years built up expertise to provide investment solutions for Malaysia onshore with fixed income, equity, money markets solutions and so on, and then we moved on to do Asia with Asia fixed income, Asia equity and some products that we manufactured internally.
I can tell you it was a pain. We took a long while to learn. My reasoning was, if we didn’t do things the hard way, Malaysians will never learn and there would be no opportunity to retain talent in Malaysia.
For the longest time, I have been a big believer of developing talent in Malaysia. We must give Malaysians a chance to learn the skillsets of managing Asian assets.
At the end of the day, we are here to help our clients manage their investments. Also, it is a mission that I set for ourselves for Malaysians to learn about capital markets in and beyond the shores of Malaysia. Of course there are limitations to what we can do, we can’t do global markets, they are too far away, there is a time difference and the coverage and skills we have may not allow us to do so. But, living in the Asian timezone, there is no reason why we cannot cover Asia quite easily.
If you look at the fund management industry in Singapore and Hong Kong, clearly, you can see a lot of Malaysians thriving in those industries. So what is the problem building it up in Malaysia?
And that’s how we started. When we decided to expand, our first thrust was to build skill sets, or what we call investment strategy within the firm. And then we identified Alternative Investments as the next thrust of growth for us.
And that is why we started off in Private Equity (PE). Eventually, we hope to do Private Debt, and so on. But it all depends on whether we can find the people we want. We are very entrepreneurial and I am always on the look out for talent. PE started because we found the right person. Two years ago, I managed to convince him to join us, and today he is my Deputy MD and he drives the PE initiatives. He comes from a PE background in London. When he came back to Malaysia, I told him there was room to build talent and skill sets here to go out and cover the ASEAN markets.
SI: A lot of your expansion and growth are based on people such as meeting the right person. When you identify the right person, what are the qualities you are looking at?
TCW: What I look out for in all my people is passion for the job. Never do it for the money I say to them because if you do, you will see limitations and there won’t be extraordinary results. If you do it because you truly believe, you will see amazing results, even beyond what you dreamed was possible.
The second thing I look out for is integrity. We can’t do this business if people don’t have integrity because this is a business of trust. If people don’t trust us with their money, there is no way we can do this business. We can only grow if we can gain the trust of our clients. But again, you can’t gain the trust of clients if you only sit in for one meeting. It doesn’t work that way. It is over years of them judging us, observing us, seeing how we react to them, sometimes over a good cycle or bad cycle.
SI: In the new environment under the PH government, what is your opinion about investors’ sentiments and confidence towards our markets? What is your prognosis of the economy going forward?
TCW: A dark cloud has lifted from this country. Today people are free and able to express different views and be accepted and that’s a breath of fresh air. Investors have to be patient. We are talking about a change of government, and we are talking about a fair bit of mess that has been inherited. We are ‘kitchen sinking’ for the moment but eventually we will get through it.
This is a very rich country. I believe we will come back stronger. When things are put right eventually, family will be together again. One of the saddest things I have seen in Malaysia is people no longer have their children with them. Many of us who have sent our kids abroad don’t see them coming back. Our change of government is one of the most significant changes for this country: family units coming back together again.
That’s why I ask investors to be patient. The GDP growth may be slowing down a bit because of the cancellation of projects, but then there will be transformation programmes and reforms. And one of the reforms that I think we will all be able to see, after such a long while, is this: It has always been the government or public sector pumping up the growth of the economy with expansions, investments and so on. I think it’s time to let the private sector take a more active role.
How do we shift from a public sector-driven growth to private sector-driven growth? We need confidence. We need reforms. We need the private sector to open up. And I believe Malaysians are patriotic. They are prepared to invest. They are just waiting for the opportunity and the framework setup. Once we have those ingredients going, they will invest. These will be much more sustainable investments than those from government spending. The multiplier effect will be even higher.
So first, I ask for patience. Don’t hope to see miracles of the market suddenly jumping up. It may take two or three months of consolidation and when the reforms are out, the market will start to focus on some of these reform agendas. Hopefully by next year, we will have a better environment.
The second observation I would like to make about this government is, if you look at the calibre of its people, it’s just amazing. When you add that calibre with the noble intention of wanting to rebuild this country, you will achieve outstanding results.
Moving forward, we expect such reforms to generate a return of monetary and human capital that would drive back capital flows. This, coupled with fresh pro-growth policies would provide the uplift of growth for the economy and make for a more vibrant market in the future.