Inside Investor Relations - Volume 28 - Foreign institutional investor series – Allianz Global Investors

Jason Ho 2021-07-19

A listed company and its Investor Relations Officer (IRO), should thoroughly understand the relevant aspects of their investors, including their background, investment strategies, and investment styles, in order to best conduct investor benchmarking or arrange an effective investor meeting. In our previous volumes we introduced Schroders, Franklin Templeton Investments, Nikko Asset Management. In this volume of Inside Investor Relations, we will introduce another important global institutional investor - Allianz Global Investors.

Source: Allianz Global Investors (AGI)

Established in 1998, Allianz Global Investors is a professional asset management company under Allianz SE (FWB: ALV). It has more than 730 investment professionals and 24 offices worldwide.

In 1999, AGI established Allianz Dresdner Asset Management in Taiwan (renamed Allianz Global Investors (Taiwan) at the end of 2015). In 2000, AGI established the first Taiwan equity fund under the name Allianz Global Investors Taiwan Fund. As of March 31, 2021, the total assets under management (AUM) of Allianz Global Investors reached 598 billion euros; in the Taiwan market AGI reached US$2.4 billion and invested in 193 Taiwan-listed companies, making it one of the top ten fund management companies in Taiwan.

AGI’s Investment Philosophy

According to our research, AGI bases their investment principle on two main axes: "risk management" and "being active". AGI implements the two concepts institutions and pension funds find the most important, "long-term benefits" and "risk management awareness". Instead of pursuing short-term profits, AGI is committed to pursuing stable long-term performance and finding hidden investment opportunities with risk management mindset. As an active asset manager, in addition to maintaining a proactive spirit in investment, AGI is further committed to communicating with the companies in its portfolios and actively expressing its views, exerting an influence on the investment targets and creating excess returns for investors.

AGI’s Investment Process

In order to build the most suitable investment portfolio, AGI traces their investments to their roots, using its unique Grassroots® Research platform to assist fund managers in making the most comprehensive investment strategies:

Source: Allianz Global Investors (AGI)

The Grassroots® Research platform is a very special department of AGI. Currently, the department employs more than 10 Grassroots® Research project managers around the world, combined with more than 300 independent and experienced Grassroots® Research reporters and field investigators, as well as more than 50,000 industry professionals, together they have formed a huge information network to help AGI get ahead of the market and preemptively identify important individual stocks and industry trends earlier. The Grassroots® Research platform works as the following:

Step1. Fund manager/ analyst - seek information channels:

Fund managers/analysts will be informed about the products of a particular company, the upstream and downstream of its industry, and its future development plans.

Step2. Grassroots® Research project manager - design investigation:

Research project managers will design investigations, compile background information, and work with reporters.

Step3. Grassroots® Research reporters and field investigators - provide market research reports:

Reporters will conduct market research, relay their preliminary findings, and submit written research reports after organizing and analyzing the data they have collected.

Step4. Portfolio manager/ analyst - Investment Group Screening:

Incorporating Grassroots® Research platform with fundamental research to make the most sensible investment decisions.

After deciding the investment target, AGI will continue to monitor the performance of the companies in its portfolios. Each portfolio manager is responsible for monitoring the companies in their respective portfolios simultaneously analysts who focus on fundamentals will pay close attention to the topics of the issuing company, examples listed below:

Strategic execution and major developments that may affect the company’s performance and value
Financial performance and key value drivers (evaluate company strategy and key performance indicators (KPI), major competitors and the overall industry)
Capital management
Significant risks (such as environmental and social issues) that may affect performance, stock prices, dividends, and adjustment measures
Quality of the senior management team (i.e. the board of directors and management) and succession planning
Corporate governance and the interests of minority shareholders
The quality of company reports, including the aspects of accounting, auditing and sustainability, as well as the quality of management discussions and analyses
Financial, operational or reputational issues that may cause significant loss of investment value

AGI’s ESG Implementation

AGI adopts a tailor-made sustainable investment strategy to satisfy customers with different investment ideas and needs. All of AGI’s investments are based on ESG insights and unique ESG research results, because AGI firmly believes that companies with good ESG performance can best stand out and manage potential risks.

While selecting investment targets, AGI will incorporate the concept of ESG into the investment analysis report. AGI will conduct interviews with the companies in their portfolios and perform an industry evaluation, further referencing to the company’s internal ESG score, the status of the company’s CSR report and statements, and finally thoroughly examine whether there are key issues that may cause the company's short, medium and long-term operational risks, all in all to avoid the tail risk that may arise after investment. Finally, AGI will write an investment report taking into consideration an ESG assessment to use as a reference for the investment.

The assessment scope includes: internal ESG score database, CSR report, current analysis on the company, etc. Concerning the companies AGI have invested in or will potentially invest in, AGI will actively make recommendations through exercising shareholder voting rights, company interaction, and negotiation, simultaneously avoiding investing in companies with tail risks to fulfill the fiduciary duty of asset managers. AGI, attaching great value to sustainability, has as many as six related investment strategies in line with the Sustainable Development Goals (SDGs). Moreover, their total asset management relating to sustainable investment strategy reached 206 billion euros in 2020.

AGI’s investment portfolio in Taiwan

AGI's team in charge of Taiwan market is mainly located in Taiwan and Hong Kong. According to our research, as of March 31, 2021, the top five Taiwan-listed companies with the highest investment value under AGI are TSMC (2330 TT), Innolux (3481 TT), Yageo (2327 TT), Ememory (3529 TT) and UMC (2303 TT). AGI is the largest foreign shareholder of Shin Foong Specialty & Applied Materials (6582 TT); among listed companies such as Sensortek (6732 TT) and Co-Tech (8358 TT), AGI is the top three foreign shareholders.

Source: QIC Database

Amongst all AGI’s funds, Allianz Global Investors Taiwan Fund holds the most shares in Taiwan, with a total investment of US$410 million in Taiwan stocks. As of March 31, 2021, TSMC (2330 TT) is AGI’s largest target company in Taiwan, and accounts for 7.8% of the AGI's total investment in Taiwan.

QIC has a wide range of international industry experts with rich experiences in the capital market, and through the exclusive investor databases and understanding of the industry, we assist the company in benchmarking suitable institutional investors, and helps companies and investors to achieve effective two-way communication, and then achieve the purpose of enhancing shareholder value.

QIC is a MiFID II exempt agency and has many years of experiences in Corporate Access Services. QIC represents high-quality corporate clients in tailor-made roadshows and investor events, and assists the company in formulating a set of investor relationship strategies. Before the meeting, QIC International provides customers with detailed investor information and analysis, so that the meeting between customers and investors and efficient communication can be carried out smoothly. If you are interested and want to know more about our services, you are welcome to contact us.

Contact: Yvonne Huang, yvonnehuang@qtumic.com

Jason Ho

Specializing in value creation within the Semiconductor and Mobility industries, Jason brings extensive expertise in semiconductor foundry, sell-side equity research, and buy-side investment to QIC. Over his 8-year tenure at QIC, Jason successfully facilitated over 30 corporations in reshaping their compelling equity stories and refining their capital market communication. Prominent clients include industry leaders such as Phison, ASMedia, FocalTech, Chang Wah Technology, PlayNitride, Macroblock, SuperAlloy Industrial, GlobalTek, ALT International, and Brogent. Jason and his team excel in fine-tuning companies' capital market strategies, identifying target investors, orchestrating roadshows, and facilitating fundraising. They also provide valuable support to existing shareholders through divestment strategies and initiatives to enhance stock liquidity. Furthermore, they have successfully enhanced the ESG ratings of multiple clients, contributing to sustainable growth and success for both QIC’s clientele.