Panin AM Follows Flows Data with EPFR ChartBook

EPFR launched ChartBook last month to make it easier for buy-side clients to better understand and utilize the vendor's raw funds flow data in their investment strategies, by providing a weekly report via email that provides commentary on money flow trends between regions and asset classes, with summaries, charts and analyses created by EPFR's in-house analyst team.

Six portfolio managers at Panin in Jakarta are using ChartBook─which they receive by weekly email from EPFR─to monitor money flows between regions and asset classes, and are sharing the strategies with four other analysts. The firm began trialing a soft launch version of the service in July.

Panin pursues a bottom-up investment strategy that only invests in Indonesian funds, so does not depend on EPFR's data for its principal activities, but uses ChartBook to gauge investors' desire to gain exposure to the region and specific asset classes within it.

"Traditionally, our Asian business has been highly concentrated in Hong Kong, but in recent years we have seen business growing in Singapore and Indonesia, whose economies are not so much linked to the Chinese market, from which the Southeast Asia region is trying to differentiate itself," says Simon Ringrose, managing director of sales at EPFR. "A lot of US and European investors─whose own countries' interest rates are low─are attracted to higher rates in Southeast Asia, which is safe, liquid, and delivers a good yield, so we have seen a lot of money going into local-currency fixed income funds."

However, being able to break down overall flows to provide more granular data is critical to understanding these money movements, Ringrose adds.

"We are seeing people wanting to go behind the headlines, because the headline flow numbers─which include exchange-traded funds and different types of investments─an be misleading. For example, 90 percent of the headline flows into Asia could be the result of flow into a single Chinese ETF... so you need to be able to drill down into separate countries and individual ETFs," he says. "We aggregate flows by asset class, country and sector, then break them down according to where the money is coming from─for example, whether it is coming from local or foreign-domiciled investors, whether it is coming from ETFs or mutual funds, and whether it is coming from retail or institutional investors."

While mostly used by investment firms to understand potential investment opportunities by monitoring investor money flows, this data is of critical importance even for firms like Panin that invest only in specific markets, so they can understand when investors will enter and exit that market, and how their firm can take advantage of an influx of assets.

"In any market, you want to know who's trying to get in or out of the room─that's critical to understanding your liquidity situation and understanding demand... so as you understand who is queuing up outside your storefront, you can position your offering and know what to showcase," Ringrose adds.