Nearly 65% of respondents believed it is more prudent to instead learn from the experiences of first movers as the risks are high due to the complexity of dealing with several regulatory authorities.
A majority of respondents (83%) expect an increase in the regulatory agenda in Asia over the next five years.
“This poll suggests that against a backdrop of regulatory change and reform there is an underlying conservatism among asset managers in Asia, combined with an appreciation of the importance of prioritisation,” said Andrew Gordon, managing director, Asia.
“Asset managers need to determine where the level of client demand, credible investment solutions and the ever-changing regulatory environment intersect to find the sweet spot for product development and distribution.”
China passport promise
About 70% of respondents said they expect the Hong Kong-China Mutual Fund Recognition programme to be the most successful of the regional fund passporting initiatives in the next five years.
The other two passporting initiatives, the ASEAN Passport (16%) and the APEC Regional Passport (13%) were viewed as less promising.
“The results reflect enthusiasm for the potential of the Chinese market, notwithstanding that the rules have yet to be published,” the firm said.
Expanding market access
The survey also indicated that respondents were bullish on attracting additional markets into the Asian passporting schemes.
However, Gordon said that the success of any passporting initiative “will lie not in the number of markets it includes but the assets that it is able to attract and retain.
“A successful passporting scheme will need to have a significant advantage in terms of ease of access, cost, automation and technology, in order to be an efficient platform able to distribute products to investors across countries.”
The Asian Region Funds Passport (ARFP) is a scheme that will permit cross-border funds between Singapore, Australia, Korea, New Zealand, the Philippines and Thailand. The working group of the ARFP came out with draft norms in early March.
Another scheme, the ASEAN CIS Framework, which facilitates cross-border offering of funds to retail investors in Singapore, Malaysia and Thailand, was launched in August last year.
Nikko Asset Management was an early mover. In October, the firm said the Monetary Authority of Singapore had approved its Singapore Dividend Equity fund for the cross-border scheme.
RBC surveyed 120 fund industry participants earlier this month. Institutional investors comprised 60% of the sample size, while solution providers (15%), advisers (10%), regulators (5%) and lawyers (5%) made up the rest.
