Key distribution markets for Lion Global Investors (LGI) are Singapore, Japan and Malaysia, but the firm is mulling plans to expand its distribution business to include other regional markets.
“It is still early days, but we are working on a couple of opportunities in Southeast Asia, including Thailand and Indonesia, as well as South Korea,” said chief marketing officer Lim Shyong Piau.
Opening local offices is not in the plan near term, Lim said, but noted that one option is distributing products via the fund feeder route. Distributing offshore products via the fund feeder continues to be the preferred channel for foreign asset managers, particularly in Thailand, according to a Cerulli report.
“The reason why we are targeting those markets is because of better accessibility and high growth AUM potential. In addition, minimal resources are required from us to be a little bit more active in those markets,” he added.
China, which is increasingly opening its markets, is key to the future of the asset management industry, Lim acknowledged. But he believes the market is too big and complex for smaller players.
“All global players are investing tons of resources trying to tap the Chinese market, [but they have] economies of scale, they have the resources to compete in the market. When you have less resources available, like Lion Global, then we just have to be very selective, pick our spot and fight a good fight,” he said.
LGI’s CEO Gerard Lee told FSA in a previous interview that his firm sees opportunity in mainland investors looking for offshore products and also in managing assets for onshore fund managers.
Lim added that although his firm has no immediate plans for a China onshore entry, parent OCBC Group has a joint venture fund management firm in China. OCBC owns 28.5% of Shanghai-based Maxwealth Fund Management, with the remainder of the stake held by Bank of Ningbo.
There are around 15 foreign managers that have launched onshore products in China by obtaining a private fund management licence from the Asset Management Association of China. So far, Fullerton Fund Management is the only Singapore-based asset manager that has launched an onshore fund in China.
Lion Global Investors is the asset management arm of OCBC Bank, which also owns Bank of Singapore. It is an Asia-specialist firm, managing around 36 mutual funds focused on Asia equities and fixed income markets, according to FE data.
Business is mainly institutional, accounting for 80% of total AUM of S$52bn ($38.1bn). OCBC Group wealth management clients account for 10%-20% of assets, CEO Lee told FSA previously.
Singapore’s ETF industry
Separately, Lim discussed the difficulty of running an ETF business in Singapore.
The firm launched its first and only ETF in 2017, the Lion-Phillip S-REIT ETF. Phillip Capital Management serves as the ETF’s sub-manager. It has gathered S$136.2m in assets, according to the fund factsheet.
The firm does not have immediate plans to introduce another ETF, according to Lim.
“There is no point in us launching another China A-share ETF or another global bond ETF. Similar products have already been launched by other players in Singapore or elsewhere in Asia,” he said.
The Lion City’s ETF industry is also not as deep when compared to other Asia markets, according to Lim. In Singapore, there are only 58 ETFs listed on the local bourse.
“The cost of listing an ETF in Singapore is high, so that deters managers from listing too many ETFs here. I think the exchange, service providers and asset managers should [work on a solution] to keep the costs lower so that it becomes a lot more attractive market for managers to list an ETF.”
Market participation also remains low. “For the ETF market to be more vibrant, getting more Singapore-based institutional investors to be open to investing through an ETF is important.”