The fifth session of NHC Capital Markets Salon focused on Asset Management and it was held on Tuesday December 19, 2017. The speaker, Dawn Jia has extensive working experience in asset management at CPP Investment Board, State Street Global Advisors, Barclays Global Investors, and CIBC World Markets.
At the start, Dawn talked about her understanding of capital markets. In her opinion, the nature of capital markets is to match demand and supply of money. The companies that demand capital enter the market and look for suppliers. The suppliers are the asset owners, who have the money to invest and want to get return from their investment. More specifically speaking of the front office in capital markets, it is the client-facing part: people at sales & trading and research serve asset managers who serve investors. Dawn stated that one of the factors that shape market trends over the long term is how easily people get access to the market. In the old days, low transparency of the markets and high transaction cost made the sell side more profitable. Since 2003, electronic trading emerged, decreasing the transaction cost for asset managers and the profit for sell side. Recently, as the technology keeps advancing, investors can easily access the market, and both buy side and sell side are shrinking.
In an asset manager’s perspective, there are three sources of return: security selection, asset allocation, and strategic tilting. On the top of any large investment decision, asset allocation is a broad strategy that determines the mix of assets to hold in a portfolio. Security selection is to identify individual security within a specific asset class, i.e. to pick the outperforming security rather than the underperforming one. Strategic tilting is to temporarily adjust a portfolio’s risk exposure from its long-term default strategic asset allocation in response to changes in expected returns.
Moreover, Dawn shared her career path and her suggestions to all the professionals. In her view, both working hard and working smart are important. When Dawn worked in the sell side, she worked hard and learned a lot even though the environment is greatly stressful. As she moved to higher level, she deeply learned how to position herself and her team. To work smart, a person should be sensitive to the company’s strategy. When a person can make a contribution to what his company want, he will become more valuable. In addition, Dawn thought that a huge learning experience for her is communication. Communication should play a crucial role through the whole process of the project. To the individual contributor who want to go to the next level, Dawn suggested the person to elevate his thought to that level and then everything would be easy. To the people manager, Dawn advised the manager to spend more time on growing team members because a great team is the manager’s asset.
It is an honor to invite all the brilliant speakers to share their experience and ideas with the young professionals. Also, it is glad to see that all the talented professionals enjoyed networking in this platform.