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Investors pursue credibility and performance in managers

Credibility, performance and service fees are key criteria for choosing asset managers, according to FleishmanHillard’s first pan-Asia future of asset management report.
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Global asset managers assessing opportunities to expand in Asia must ensure they live up to the expectations of local investors in terms of credibility, performance and service fees.

These are the three key criteria for the majority of investors when choosing their external provider, according to FleishmanHillard’s ‘The Future of Asset Management in Asia 2022’.

Overseas asset managers, meanwhile, are preferred by investors over local players for their performance (53%), track record (45%) and trustworthiness (43%).

“Overseas managers need to think through how they can accommodate investors’ appetites by delivering uncorrelated alpha with well-timed, top-notch investment solutions drawing upon a variety of global expertise and experiences,” said Patrick Yu, Asia Pacific lead of FleishmanHillard’s financial and professional services sector.

Asia-based investors also value asset managers that are transparent in customer communication (92%) and fee disclosure (89%), as well as offer sophisticated risk management capabilities (90%) and strong ESG products (78%).

“Despite continuous market volatility in 2021 and the first quarter of 2022, Asia continues to be an epicenter of growth for international asset managers, with China presenting opportunities for expansion amid an upsurge in the number of affluent investors in the region,” added Yu.

Meeting new needs

The report includes qualitative and quantitative data based on an online survey of 418 investment professionals in mainland China, Hong Kong, Singapore and South Korea, between April 27 and May 5, 2022.

Among other findings, most Asian investors show a strong preference for investing locally, given this is the region they know best.

South Korean investors are the exception; they want to invest mostly in North America (58%) and are almost as likely to target Europe (37%) as Asia Pacific (39%).

From an asset allocation perspective, global volatility stemming from the Ukraine-Russia conflict has resulted in a general focus on lower risk options. However, Singaporean investors are just as likely to maintain their current asset allocations as they are to reduce risk, found the research.

Choice of sector has n’t really been affected by the fall in stock markets, with investors in the region keeping their sights on innovation sectors this year; 53% said they will invest in the internet and technology sector.

At the time of the survey, cryptocurrency-related products topped investors’ wish-lists, with 45% showing interest despite the already-weaker performance in the six months prior to the survey.

Just over 40% of investors also expressed interest in metaverse-themed products, while 33% said they are considering exposure to non-fungible tokens (NFTs) or digital collectibles. This is largely driven by investors in Hong Kong, 43% of whom expressed interest in these assets.

Part of the Mark Allen Group.