AllianzGI uses internal systems to share research calls globally and also ensures that traders and fund managers have the correct information and contacts to trade those markets. Traders share, with their main brokers, watch-lists of stocks they are most interested in and they also monitor lists of the largest and most important firm holdings so they can keep the global teams up to date.
Kunal Ghosh, Head of AllianzGI’s Systematic Equity Portfolio Management Team (divided between Singapore and San Diego), gives us an example: “I got an early morning head’s up from Kent Rossiter about some news and downgrades on a stock held in the funds. The news was disappointing and the stock was also deteriorating in our quant screening so we were able to react quickly. It takes AllianzGI’s corporate values to heart, being able to ‘understand’ the stock drivers, ‘act’, by using the news intelligently, and work together ‘as one’. We were able to get out near the day’s highs before the stock slid further throughout the day.”
A single trading desk also helps with compliance monitoring, fostering product knowledge between each other and across different markets between traders – something that would be more difficult if we were in separate locations.
There is a unified TCA benchmark within AllianzGI globally, but this doesn’t mean that teams in different locations can’t have different preferences. Equally, there are further regional differences between the fund managers and the traders; for example, a ‘careful discretion’ (CD) from European or US portfolio managers may actually be executed quite aggressively, whereas a CD from Asian-based PMs may mean that they are more willing to spread the orders out over the trading session.
Overriding global policy vs. regional practice
Historically, our Frankfurt and European teams used more derivatives than other regions, though our US colleagues have also been trading derivatives from New York for years. So too, have the other desks for the trading of futures and single stock options.
Until a couple years ago however, there was no reason to roll out an entire derivative trading team in Hong Kong. Once we started trading our first stock options, we saw the number of accounts trading futures increase too. We then traded our first total return swap and also started trading some cross currency swaps. Since launching our global multi-asset futures trading strategies from Asia, it made perfect sense to coordinate these trades with our other global derivatives traders.
So where we identify a need within AllianzGI, the systems and knowledge are already in place to roll it out relatively quickly.
Skill-sets on the desk
Running a multi-asset trading desk inevitably means there are more topics in which our traders have to specialise. There are so many in fact, that the work has been allocated so each trader focuses on a different subject, developing them into the ‘go-to’ trader for that area. We have built these skill-sets on the desk, so whether it’s the application process for IGB’s bond quota or trading NDFs and restricted currencies, we have specialists on the desk who can be tapped for their specific knowledge. The more products there are, the more complex and time-consuming the set-up, legal documentation and monitoring become. For example, if we are looking at a new product for our multi-asset team (e.g. commodity futures or bond ETFs), we can initially trade ‘screen prices’ because order sizes will be modest. As assets grow, so will trade sizes and we will need to access liquidity off exchange (OTC) in a different way, i.e. with CME commodity futures by registering on CME Clearport Clearing, and trading with market-makers, or for bond ETFs, potentially by redemptions and creation of the underlying as opposed to on-screen market making.
We are continually striving to do more to offer our clients the solutions they need. We call this AllianzGI 2.0 which is a best practices program of skill-building and bringing our services to the next level – staying ahead of the competition by being ‘best in class’.
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Multi-Asset Executions Across Asia
