Assets under managment (AUM) in Asia grew by 15.9% in the first nine months of 2021, compared with the 11% increase recorded in the same period of 2020, according to Cerulli Associates
This was led by a 20.2% growth in China’s fund industry’s AUM, followed closely by 19.5% growth in Singapore, and 16% growth in India.
“The development of emerging themes, including ESG and passive investing, and continued regulatory support across various markets indicate a positive outlook for Asia’s mutual fund industry,” said Ken Yap, managing director of Asia at Cerulli Associates.
ESG investing continues to gain traction throughout the Asia-Pacific region, along with increasing commitments to net zero emissions and decarbonization.
China’s asset management industry is expected to continue registering sound growth in the long run, driven by the nation’s economic transition to high-end and green manufacturing, an increasingly diversified product and distribution landscape, and further foreign capital relaxation on business ownership, according to Cerulli.
Elsewhere, in Singapore, the central bank is stepping up efforts to channel capital to environmentally friendly projects, while enhancing fund domiciliation opportunities, said Yap. In India, product innovation is expected to continue in global investments and sustainable themes, offering global managers product partnership opportunities with local fund houses.
Meanwhile, superannuation funds in Australia are pushing for stronger ESG practices among their investees, driven by members’ demands and supported by a wider industry push.
In Malaysia, asset managers have been integrating both ESG and shariah principles into single funds; the number of qualified sustainable and responsible investment funds has tripled since 2020, according to Cerulli data.
In Hong Kong, global managers have launched sustainability-themed products for accredited investors in recent years. Regulators and associations are also making more concrete efforts to introduce standardized disclosures, especially in the areas of climate change and carbon transition.
“Apart from ESG, other emerging themes spell growth opportunities,” said Yap.
Retirement in China is a lucrative market, especially with a new pension system providing tax incentives for eligible mutual funds and bank-issued wealth management products in the pipeline.
Passive investing in India has come under the limelight — the range of ETFs has broadened to include healthcare and consumption-based ETFs, among others, and silver ETFs could join the line-up in 2022 following the release of regulatory norms last November.
In Korea, given the hunt for yield in the prolonged low-interest-rate environment, the shift from fixed income to alternatives is expected to continue among asset owners, noted Cerulli. However, regulatory curbs and a shortage of internal expertise mean that traditional asset mandates remain important.