One of the highlights of the 2014 annual Think Global mission to the Asia Financial Forum was the local industry participants day where Stewart Aldcroft provides an overview of “The Funds Management Business in Asia”.
The presentation contained a lot of statistics on the size of the market, composition of HNWI in AsiaPac, key funds management industry players, sovereign wealth funds and where the opportunities are across the region.
Some key points included:
- Private Banks – minimum criteria USD 1M in liquid assets
- Funds distribution is via agents rather than advisors who are seen as intermediaries – “just facilitate”
- Clients are very active with their investments, so may not keep the funds with you
- Research from Taiwan on savings plans – not working with average fund held only 13 months!
- ETF’s are big (refer slide 12)
- Structured products – drop off in hedge funds, private equity etc due to “bad experiences”
- Some interest in private equity co-investments schemes – these don’t have much of a track record with minimum 7-10 year timeframes.
- Last 2 years focus has been on high yield/high income funds, but now petering out with perceived increased risk
- In 2013, 70-80% went to 8 funds with 5 managers: Alliance Bernstein, Pimco, Schroder’s JP Morgan, Alliance
- In 2007, 80% of funds flow was into equities (refer slide 19)
- Citi have 1,200 funds on their APL but focus on about 100-120.
David Thomas, Think Global, commented that “only successes have been where there are asset gaps such at infrastructure e.g. AMP and Macquarie. There were good opportunities 18 months ago for fixed interest, but funds take so long to get organised, the opportunity may have passed”.
Opportunities going forward
In summary, there are opportunities for Australian fund managers, particularly in sectors that have lower coverage, but size of the fund manager and brand recognition is important.
It is critical to understand the market which takes time to build given the focus on relationships, trust and brand, and appreciating the cultural differences in doing business in Asia.
You can access the presentation slides here: AFF_January_2014_Fund_Management_in_Asia_V13