According to Cerulli’s annual Asian Distribution Dynamic report, mutual fund revenues in Asia ex-Japan rose 1.6% in 2013 to nearly $6.5bn (£3.79bn), recovering from a decline in 2012.
However, over a longer time horizon, the report shows only three markets–Taiwan, India, and Hong Kong–posted positive compound annual growth rates between 2009 and 2013.
Against this backdrop, Cerulli has said cost controls and being prudent becomes imperative to run fund management business in Asia.
Revenues, which are defined as average assets under management multiplied by net management fees, have been hurt as weak market conditions coupled with volatility took a toll on the performance as well as the assets under management of the funds.
The report goes on to add, that a lack of interest in fund products, especially equity funds, could possibly be among another reasons for adverse impact on revenues while “stiffer” competition for a smaller asset pool exacerbates the problem.
About 84.2% of fund houses Cerulli surveyed indicated salaries have increased in last two years by 1%-5%, and a similar percentage expect these costs to rise further in 2014 and 2015.
Yoon Ng, Cerulli’s Singapore-based Asia research director said: “Salaries, for instance, are a necessary cost base, and increased expenditure to keep good people is usually justifiable.”
“This is because fund management is ultimately about people–a firm’s fortunes are closely tied to the caliber of its portfolio managers and sales, marketing, and client service people, among others.”
