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Hong Kong leads in cross-border fund AUM

Asia-Pacific now accounts for 10% of global fund assets under management.

In the region, Hong Kong has the largest share of cross-border fund AUM, according to a Broadridge Financial report.

Assets in cross-border funds such as Ucits amounted to $1.4trn as of the end of September last year in Hong Kong, accounting for 90% of the SAR’s asset management industry, according to a Securities and Futures Commission (SFC) report. Luxembourg-domiciled funds dominated the industry in Hong Kong, with around $1.06trn in assets.

Hong Kong is followed by Taiwan, according to the Broadridge report. In Taiwan, assets of cross-border funds stood at NT$3.18trn ($103bn) last year, which is larger compared to its domestic fund market (NT$2.57trn), according to data from Taiwan’s Securities Investment Trust and Consulting Association.

Top 5 cross-border markets by AUM

Rank

Market

1

Hong Kong

2

Taiwan

3

Singapore

4

Japan

5

Australia

Source: Broadridge Financial. The firm did not provide numbers for AUM of the top five.

In terms of domestic funds, China has the largest share of AUM in the region, according to Broadridge Financial. Mutual fund assets in China were around $1.9trn in September last year, according to a Cerulli Associates report.

Top 5 domestic markets by AUM

Rank

Market

1

China

2

Japan

3

Australia

4

India

5

Hong Kong

Source: Broadridge Financial. The firm did not provide numbers for AUM of the top five.

 

Selecting a strategy

In 2018, the AUM of Asia-Pacific mutual funds and ETFs combined but excluding fund of funds was $3.8trn, accounting for 10% of global fund AUM. Although the region ranks behind the US and Europe, Asia-Pacific has generated at least 25% of global net fund flows over the past 10 years, the report noted.

Apac AUM has also more than doubled since 2012, with a five-year compounded annual growth rate of 14%.

The report added that there is no single strategy applicable to every market in the region. For example, passporting Ucits funds into select jurisdictions, such as in Hong Kong, has proven lucrative for some global asset managers.

However, in other markets such as China or Indonesia, fund managers must choose between joint ventures, partnerships, sub-advisory or establishing a local presence.

“While Apac has long been a growth market for global fund sales, a highly varied distribution landscape has posed challenges for large asset managers,” Yoon Ng, director for Apac insights at Broadridge, said in the report.

Part of the Bonhill Group.