“Asian asset managers are looking for global visibility and Ucits is the best platform do so,” Alessandro Silvestro, managing director at Lemanik, Hong Kong, told FSA.
Daiwa’s Luxembourg-domiciled Sicav was launched in May with the inception of three Japanese equity sub-funds. These were followed by the Small Mid-Cap Emerging Asean Equity Fund in June, and the Asian Equity Fund and the Income Focus Asian Equity Fund in late August.
Headquartered in Tokyo, Daiwa Asset Management has assets under management (AUM) of $144bn, according to the firm’s website.
Daiwa has not breached the $1bn AUM mark in Europe, and only a few Asia-based managers have. They include two other Japanese asset managers, Nomura Asset Management ($9.2bn) and Nikko Asset Management ($2.26bn), Morningstar data shows.
None of the Daiwa sub-funds funds are yet authorised for sale in Hong Kong and Singapore. Instead, the focus is to gain traction among European investors, according to Silvestro.
“Asian asset managers are increasingly looking to launch Ucits products to expand their distribution capabilities internationally through gaining access to larger retail markets in Europe and elsewhere, and also to enhance their brand,” he said.
“The Ucits label indicates high quality governance due to the well-regulated regimes in Luxembourg and Ireland,” he added.
Lemanik provides Luxembourg and Ireland management company services, which includes ensuring funds are compliant with regulations and that risk management controls are in place, and administers assets of €30bn ($33bn) for about 70 clients globally.
“Similar to a trustee, we make sure that the fund is safe and respects European Union rules and regulations,” said Silvestro.
Asia asset managers look west
The firm opened its first Asia office in Hong Kong last year, and also has offices in Luxembourg, Dublin, London, Milan and Lugano.
Other clients of the Hong Kong office include three China asset managers — CSOP, Fullgoal and China Universal — as well as the Hong Kong operations of Australia’s Macquarie and the Singapore business of South Africa’s Foord, according to Silvestro.
A rival third-party management firm, Fundrock, recently opened an office in Singapore in anticipation that more Asia-based asset managers would seek access to the European market.
Fundrock’s clients include China Asset Management, Harvest Global Investments, China Post Global and GF International who are keen to address the broadening demand for China A-share strategies, in particular, Paris-based CEO Xavier Parain told FSA earlier this year.
However, demand for Asia-focused products does not necessarily translate to inflows for Asia-based managers.
The Ucits market is already competitive with at least $4trn in assets, with global players already offering Asia-focused strategies, and so far, Asia-based managers that have entered Europe have enjoyed limited success.
“Setting up a fund in Europe is the easy part, but distributing the fund and finding investors is most important,” Fundrock’s Parain said previously.
For instance, Value Partners, which has around five Ucits funds in Europe, has only sourced $367m, accounting for just 2% of its $18.3bn global AUM, according to data from Morningstar. CSOP Asset Management manages $6.7bn in assets, but only $9m of that is from Europe.
