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Fund Manager Portrait: Amy Kam

25 June 2020

It has been a long journey – quite literally – for Amy Kam as she has pursued a career managing investment portfolios in London’s busy financial hub.

Born in picturesque Guilin in southern China, which is renowned for its jagged limestone peaks and limpid rivers and is well over 1,000 km (600 miles) from Shanghai, Amy first moved to London nearly 20 years ago. Since then, she has become firmly established as an investment manager whose expertise in Asian credit markets is widely recognised and has earned her many plaudits1.

But Amy originally intended to become an engineer and studied mechanical engineering for her undergraduate degree. She began to consider a career in financial markets when she found herself in Hong Kong at the height of the Asian financial crisis in 1997. Amy saw first-hand just how financial market moves could impact on local economies and, indeed, the wider region.

Global perspective

At this point, Amy decided to change direction and study for an MBA. She was determined to come to the UK to study because she wanted to gain the kind of global perspective that was not available in Hong Kong or China in the early 2000s. “I didn’t know much about London” she says, “But I knew it was a truly global city so it felt like the natural place for me to be.” She packed up her life in Hong Kong and embarked on the gruelling (and highly respected) one-year MBA programme at Cranfield University, 50 miles outside London. Amy had a clear plan: “I studied as hard as I could, typically working for 110-120 hours a week. But I also wanted to stretch myself in other ways. Cranfield is a global melting pot and I was determined to meet people from as many different nationalities and backgrounds as possible. I decided that the best way to do this would be to try out lots of things I’d never done before, like marathon running, playing rugby and organising a trip to the Edinburgh arts and cultural festival. I learned so much during my MBA, but one of the most important lessons was that you’ve got to venture outside your comfort zone if you want to break down cultural boundaries and really get to know and understand people from across the globe.”

Amy believes that the combination of determination and innate curiosity which guided her at Cranfield continues to drive her today. She emphasises that credit analysis involves a lot more than just scrutinising spreadsheets. Her decision-making is heavily informed by the collective wisdom she gains from direct dialogue with issuer management teams, input from her big global network of colleagues, and buy-side as well as sell-side peers. In addition, she prioritises ‘boots on the ground’ trips to Asia, where she gets to look beyond firms’ financial metrics and see how their businesses operate in the real world. Amy always weighs up her local experience with a more globalised perspective on prevailing macroeconomic and sector trends. She explains: “I firmly believe that fundamentally-driven, bottom-up bond selection is core to generating returns, but it’s vital to combine this with top-down analysis of the big picture because macroeconomic developments and geopolitical and structural headwinds can quickly wipe out credit gains”.

Amy examining models of the China Three Gorges Group’s hydropower dam projects in 2019

Amy’s academic credentials are exceptional. As well as her MBA, she also has a PhD in Finance examining emerging market capital reallocation efficiencies from Cass Business School at London’s City University which she concluded in 2006. The steely determination that drove her through her move to the UK and her academic success impact on Amy’s interests outside work. She is a fiercely competitive squash player (and once captained the well-known Lambs Squash Club ladies team which won third place in the UK national club championship a few years ago), even refusing to abandon a squash tournament after breaking her wrist. That said, Amy also enjoys gentler pursuits, including playing the piano and gardening, which both offer good ways to wind down from the often hectic pace of bond investing.

Amy playing squash with a broken wrist

The importance of long-standing relationships

In 2005, she began her career as an investment professional in earnest and joined Investec Asset Management as a performance analysis. One year later, she moved to Julius Baer Investments, where she began working as a hedge fund market risk analyst for its specialist fixed income and foreign exchange hedge fund arm. This led her to GAM Investments through an acquisition in 2009.

It was at Julius Baer that Amy first met and began working with many of her colleagues at GAM today, including Paul McNamara, who heads up GAM’s emerging market (EM) debt team, Adrian Owens, who leads its global macro and fixed income capabilities, and Alex McKnight, who leads its strategic bond franchise. Amy deeply values the length and stability of her relationships with her colleagues at GAM. She explains: “Building effective relationships with trusted colleagues is essential if you want to stay on top of all the dynamics driving bond and currency markets. These are just too huge for any one person to monitor consistently and robustly. At GAM, I gain absolutely invaluable insights from Paul, Adrian and Alex, from my EM equity colleagues Tim Love and Rob Mumford and, of course, from the global credit team headed by Jack Flaherty.”

Amy also acknowledges that her focus on risk monitoring early in her career ensures that she is always particularly risk-aware when exploring investment ideas and constructing investment strategies. She is keenly aware that the number of variables that can impact on financial markets are so huge that it is almost impossible to be absolutely certain that any single investment thesis will play out in exactly the way you might expect – which is why she recognises that downside insulation, in the form of risk management and risk mitigation, is absolutely critical.

Championing Asian credit …

After moving to GAM, Amy began to specialise in Asian credit, with her role growing in stature as the size of the asset class itself has soared. During Amy’s time at GAM, the hard currency Asian bond market has grown at a breathtaking rate, quadrupling in size in the last seven years alone. Asia now dominates EM corporate bond issuance, with Chinese companies accounting for the vast majority of Asian supply (around 65% in 2019). In Amy’s view, the diversity of Chinese supply and the rise of new markets (such as India and Indonesia), as well as the upward trajectory in the credit ratings of major Asia sovereigns in the last decade, are among the factors explaining why Asia’s bond universe has grown so significantly. Amy firmly believes there is much more to come, but is at pains to emphasise that she always views the opportunity set with the rigour and the focus on hard empirical evidence that drove her PhD research. She explains: “I’ve seen this asset class grow from relatively humble origins 10 years ago to become a sizeable part of global credit supply. I’ve been lucky enough to get in at the beginning and have championed the inclusion of Asian credit in EM and broader global fixed income portfolios, while always viewing the opportunity set from a truly global perspective grounded in my academic research. In my view, the asset class will soon no longer be regarded primarily as a niche or a diversifier. It’s now sufficiently deep and rich to allow for the creation of portfolios that comprise Asian credit alone. Issuance is, on average, high quality and default rates are low and stable. I think Asian credit will go from strength to strength as the region’s economic powerhouses continue to grow their global influence. China and India combined are expected to account for around 50% of global GDP growth in 10 years’ time. This makes me very excited about the potential on offer from Asia’s growing and liquid credit investment universe.”

And advocating green bonds

Amy is a passionate advocate of investment approaches that emphasise better environmental, social and governance (ESG) standards. She believes that growing up in Guilin, whose natural beauty makes it one of China’s most popular tourist destinations, helps explain her commitment to preserving and protecting the natural environment. She is particularly enthusiastic about the increasing importance of so-called green bonds – bonds issued to support specific climate-related or environmental goals – as a proportion of total Asian credit supply. China is proving a green bond trailblazer as it gets to grips with building out a more environmentally-friendly economy. In 2018, for example, it issued well over USD 30 billion in internationally-aligned green bonds, making it one of the world’s largest green bond issuers. Amy firmly believes that bond holder activism will have an increasingly important role to play in promoting better ESG standards. She explains: “Bond investors who emphasise ESG credentials can and do influence corporate behaviour. In my view, investors are increasingly going to prioritise ESG standards when selecting where to invest and this will impact more and more on firms’ ability to borrow in the capital markets. We are going to see companies with good ESG credentials being rewarded with cheaper financing – and ESG laggards finding the opposite is true. I am very optimistic about what this secular trend, alongside the growing issuance of green bonds, will mean for the future of our planet.”

Greater focus on ESG is just one of the changes that have occurred since Amy first began her career in financial markets. The dynamic nature of the world we live in means that Amy is constantly reviewing the inputs that feed into her credit and macroeconomic analysis. At the time of writing, a key concern is the potential impact of the novel coronavirus outbreak. Amy explains: “Obviously, my prime concern is the human cost of this outbreak. But, equally obviously, I am monitoring its potential financial and economic implications carefully. The outbreak is a stark reminder that I will always face fresh, and unexpected challenges, as I continue to navigate financial markets.”

1The Asset, a leading financial magazine for Asian decision-makers, has named Amy one of the ‘Most Astute Investors in Asian G3 Bonds’ in its Benchmark Research survey for seven consecutive years from 2012 through to 2019.
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