A TAILORED APPROACH
As discussed earlier in this series, tapping Asia’s growing wealth as a source of new fund inflows is becoming as crucial as selling Asia-focused products to the rest of the world. But the vast diversity among Asian markets means asset managers’ approaches will only be as successful as their ability to win business from specific investor bases and distribute funds in individual jurisdictions.
Here, local and regional players will inevitably tend to have an advantage, and pan-regional business approaches are unlikely to work. In a 2016 survey of wealth managers’ clients, for instance, consultancy EY found marked differences between markets, with those in Singapore and Australia more likely to take a goals-oriented approach, and those in Hong Kong and China more concerned about benchmarking against index performance.
Establishing, or bolstering, a local presence, is therefore increasingly vital for two reasons. First, it goes hand in hand with the drive for product diversification and specialisation, which will require more thorough on-the-ground research capabilities. And from a sales perspective, it will be necessary to build relationships among the region’s rising investor bases.
This speaks to the conundrum facing many global asset managers over the best means of accessing Asia’s varied markets. In the case of China, given the relatively slower expected pace of capital account liberalisation, and the fact that it remains a broadly domestic market, whether to go it alone or work with intermediaries remains a tough decision. Getting approval from the regulators to sell Hong Kongdomiciled funds in China through the MRF scheme is one thing; honing a successful distribution strategy is quite another.