The assets breached US$10trn (£6.21trn) for the first time in 2012, rising 9.6% on year.
As assets grow, institutions’ growing appetite for alternatives will help drive opportunities for external managers, Cerulli said.
“Stronger increases are expected from Southeast Asia, as institutions in those markets are relatively underdeveloped and are growing their assets from low bases,” the firm said in a report entitled “Institutional Asset Management in Asia 2013.” It comprehensively examines the region’s institutional landscape and outsourcing opportunities for external fund houses.
Cerulli expects growing appetites for alternatives and deregulation to drive institutional outsourcing across Asia ex-Japan.
Alternatives allocations, at 10% of overall portfolio, still remain small at most institutions but are increasing steadily, Cerulli noted.
Emphasizing on early start, Cerulli said, external managers play “many” roles in assisting institutions in alternatives, including co-investing and conducting due diligence.
“Managers that start engaging institutions early-even when the latter are not ready to allocate to alternatives will stand a better chance of winning mandates when an institution is ready to invest,” says Cerulli senior analyst Chin Chin Quah, who led the report.
Meanwhile, deregulation is freeing up the investment shackles of some institutions with China “being at the forefront” with a series of deregulations, especially for insurers.
The Chinese authorities late June allowed insurers to set up fund management units to offer mutual funds to retail and institutional investors. Australia-based AMP Capital and local insurer China Life recently entered into a mutual fund joint venture agreement.
“It could be a way for global fund houses to participate in China’s retail and institutional markets if they are able to team up with the right local insurers,” says Ken Yap, Singapore-based director and head of Asia-Pacific research at Cerulli.
Headquartered in Boston with offices in London and Singapore, Cerulli Associates provides financial institutions with guidance in strategic positioning and new business development.
