The AUM in the Apac region for non-money market mutual fund products is forecast to grow at a compound annual growth rate (CAGR) of 16% to reach $8trn in 2025 from $3.83trn at the end of 2020, according to Broadridge’s APAC D360 report.
This is being driven by the increasing market share of mixed asset products, with a CAGR of 22% over the next five years from $933bn in 2020 to $2.5trn in 2025.
That accounts for 31% of the market share in 2025, up from 24% at the end of last year.
The asset class is especially gaining popularity in Hong Kong and Taiwan, with most of the flows shifting to mixed asset income funds.
In Hong Kong, the combined net sales of mixed asset income products were $1.36bn during the first quarter of the year, $2.87bn in the second quarter and 1.79bn in the third quarter of 2021.
Meanwhile, the combined net sales of other mixed asset funds have decreased to $533.2m in the third quarter from $1.78bn in the first three months of 2021.
In Taiwan, the combined net sales for mixed asset income products were close to $2bn for the third quarter in 2021.
Broadridge believes this is because mixed asset income funds pay out dividends periodically, and “income distribution” has long been a key feature of popular products sold in these markets.
An increasing number of fund managers in Singapore are also introducing multi asset products targeting retirement planning, while mixed asset funds in Japan have been seeing steady quarterly inflows for most periods since the second quarter in 2017.
During the first half of 2021, China retail banks drove a series of mixed-asset fund launches with high equity allocations. While new fund launches are expected to continue to be driven by retail banks, retail advisory businesses promoting “lower cost, longer term” investments across multiple strategies are likely to gain traction, according to the report.
Model portfolio services
A potential other growth area in the Apac mutual fund landscape is “model portfolio services” (MPS), Broadridge said.
Contrary to traditional bespoke discretionary offerings, asset managers or wealth advisors combine a diverse range of funds or ETFs to form a portfolio that generates an expected return with a corresponding amount of risk.
Broadridge picks out the key growth markets for MPS in Apac are Australia, Japan, China, Hong Kong and Singapore.