Head of Portfolio Management Group; Co-Head of Investment Strategy Group @Goldman Sachs
“we will see momentum in Asia in terms of adoption of ETFs versus mutual funds as a broad trend going forward”
Jobs in ETFs (JiE): Tell us about your career path as Head of Portfolio Management Group in Asia at Goldman Sachs Private Wealth Management and the core values that helped you get to where you are today.
Jacky Tang (JT): I joined Goldman Sachs seven years ago as part of the Investment Strategy Group under the Private Wealth Management business. The Investment Strategy Group focuses on advising clients on asset allocation, especially on strategic and tactical asset allocation.
After a few years I started to also manage both the portfolio advisory business and the discretionary portfolio management (“DPM”) business for Goldman Sachs’ private wealth clients in Asia, overseeing the portfolio construction process including the upstream asset allocation and the downstream portfolio implementation. I also help clients manage and run their portfolios on an ongoing basis.
This is my 20th year in the finance industry, having worked on sell side research and buy side portfolio management including hedge funds. I truly enjoy what I do and this is what keeps me going.
JiE: Are there elements of culture that attracted you to the firm and keep you there?
JT: The culture of communication between different teams, across divisions throughout the firm has impressed me the most. I have experienced working at other banks where the focus was usually on your own area and your team, making it difficult to understand the world outside your own domain. At Goldman Sachs we communicate across divisions, we know each other’s business and we are always looking for any opportunity to collaborate. Fresh ideas and new opportunities emerge when we actually connect with each other.
JiE: Is there any challenge that stands out in your career to date?
JT: Education is a key challenge – making sure that clients understand the best way to manage their investments.
Educating clients on how to manage their portfolios over the long term is a gradual process. We have seen significant improvement over the past 10 years but we still have a distance to go. There’s a lot of new wealth generated in this region – new wealth meaning new clients, new mindsets and we have to continue to educate. That’s the challenge and, at the same time, an opportunity for all of us.
JiE: Can you share some insights into how the Asian ETF market differs from the European or US market?
JT: Asian clients tend to be more alpha focused in trying to time the market so they prefer single stock more than a broad based index compared to developed markets like the US or Europe.
However, I think we will see momentum in Asia in terms of adoption of ETFs versus mutual funds as a broad trend going forward.
The adoption of ETFs will continue to rise, both on the retail and institutional side given the increased volatility in the market since 2016.
A significant portion of our client portfolios are ETF-based. Five years ago our DPM portfolios were mainly invested in mutual funds. Now over 60 per cent of the allocation in our standard portfolio implementation is in ETFs. We also have some clients who invest their entire portfolio in ETFs.
Is there any particular challenge on the horizon for ETFs and are there things that the ETF industry needs to do differently, or more of, to be more relevant to Asian fund selectors?
JT: There are many ETFs but mainly equity ETFs, which is why I think we need more diversification. Over the past two years fixed income ETFs have been growing but we need more. Sometimes with ETFs, once you have set the mandate, there is little room for change because you are tracking an index. For fixed income you may want to have some active duration management or some active management on the credit risk. But how do we facilitate that? Should we have fixed income ETFs with the same benchmark but a different duration adjustment and credit adjustment so that investors have the opportunity to make use of the same underlying benchmark ETF, but with a variety of different duration and credits for us to modify? If we are actively managing fixed income portfolios, we can do this easily, but in managing a fixed income ETF, it is very hard to achieve.
The variety of ETFs needs to be improved. Not only within fixed income, but also among different asset classes such as equity, hedge funds, and commodities. There are a lot of options to work on.
JiE: Does the daily drama of international reality TV and Twitter politics make the role of the investment strategist any easier (like you get to see it play out as if you were the room), or is it more difficult (there are unpredictable twists and turns daily and sometimes hourly)? Or is it just noise to filter out?
JT: As an investment manager you always want to know the trends and make the right investment decisions. The more information you have, the more work you have to do to process the information. It depends very much on the manager’s skills to analyse this information and identify if it is useful or not.
JiE: How do you stay happy, positive and mentally fit for work – any secrets you can share?
JT: Really enjoy what you’re doing – that’s the secret for me. There will always be ups and downs but if you enjoy what you are doing, if you enjoy the process, you will stay motivated even through the tough times.
JiE: What is work life balance for you and are you able to achieve this or how do you try to achieve it?
JT: I go to the gym every other day just to make sure that I disconnect from work. I also spend time doing something to clear my mind – listening to music is great. I encourage my team and remind myself to be balanced and have a clear mind.
JiE: Beyond Goldman Sachs you have a busy life. You’re a professor at City University of Hong Kong and founder of both the Chi Mei Children Education Fund and Esgonomics.
JT: I’ve been in this industry for almost 20 years and really want to give back to society, to the community, by helping those who are in need. I spend a lot of time doing community service, including the work with Chi Mei Children Education Fund.
I also want to pass on the knowledge gained in my work and through my Ph.D. to some of the younger generation, so that is why I became a professor at university – like a knowledge transfer!
I have received a lot during my 20 years in the industry and I feel it’s important to give back.