After raising nearly $2bn in assets from launching FMPs in Taiwan in the past year, Invesco is now targeting investors in Hong Kong.
In late-July, the firm launched its first retail FMP in Hong Kong, the Global Bond Fixed Maturity Fund 2022. During the fundraising period, the product gathered $301m, according to Terry Pan, Invesco’s CEO for Greater China, Southeast Asia and Korea.
Last week, the firm received approval from the Securities and Futures Commission (SFC) to launch another FMP – the Global Bond Fixed Maturity Fund 2022 – II, according to the regulator’s records.
Pan explained that both products follow the same strategy. “There was demand for a second one, which is now going through the fundraising period.”
Tight distribution
Pan said that the distributors for the second FMP are different from the first. FMPs tend to have a small number of distribution partners, which he declined to name.
“The marketing for FMPs is different from how we normally market a mutual fund in Hong Kong. When you market a traditional fund, you have multiple distributors.
“But when you are creating a FMP portfolio, it really depends on the requirements that the banking clients have in mind, and if there are other distribution partners that happen to like the strategy, then we can add them on,” he explained.
The requirements from banks include the product risk profile.
“Some of them want a high-yielding product, so they are aware and willing to take on credit risk. For some, they want only investment grade and will specify which credit ratings the fund should invest in.”
The products are the firm’s first SFC-authorised FMPs. Previously it offered FMPs to Hong Kong’s high net worth individuals, according to Pan. In 2016, the firm created an FMP for a private bank, which Pan said raised some assets in Hong Kong, Singapore and the Middle East.
Similarly, Eastspring Investments this year launched an FMP to high net worth individuals in Hong Kong, Singapore the UK and the Middle East through Standard Chartered Private Bank, which raised around $417m from investors.
Other fund managers introducing FMPs in Asia include HSBC, Amundi and BNP Paribas Asset Management.
FMPs are in demand because they are in-and-out products, offering regular income for a specific time period. They still carry risk, but unlike a regular bond fund, all principal is typically returned at maturity (if no defaults), plus investors receive income monthly or quarterly, as specified.
Time-to-market
Launching FMPs to address the retail investor base is easier said that done, because the regulatory approval process may add delays to the product’s short lifecycle.
Time-to-market, or the period of time from when the product idea is conceived to making it available for sale, is short for FMPs, as these products only have a limited time to raise assets from investors.
“Adding regulatory approval to that speedy process is never easy,” Pan said.
In Hong Kong, other fund managers have recently launched FMPs to retail investors, including HSBC Global Asset Management, Hang Seng Investment Management, and Bea Union Investment Management.
