M&G is bullish about the expansion opportunities in Asia as the UK-headquartered investment manager prioritises growing its retail footprint, according to Amy Cho (pictured), head of Asia Pacific.
M&G has endured a difficult few years since its demerger from Prudential in 2019, characterised by outflows from some of its flagship funds, lacklustre share price performance and personnel changes, albeit its experience is not drastically dissimilar to most other asset managers.
In March last year, new CEO Andrea Rossi announced a cost-cutting programme, but Cho said that the impact on Asia had been practically non-existent as the firm was prioritising growth in the region.
“The short answer to your question is no impact at all to Asia and I feel the situation is quite positive. Why? It’s all about growth, being gung-ho with all the initiatives we want to do,” she said.
“Of course, there’s no free lunch. Where do you find additional capital? When we look at the wider group, there are some cost savings so it’s about redeploying those resources to support growth and Asia is one of those areas.”
Cho highlighted retail especially as an area that M&G was looking to grow in Asia given the growth in this segment and also the fact that it represents something of a gap in M&G current offering.
Expansion into retail
M&G traces its origins in the region to the early 2000s, starting in Singapore when it began investing in real estate. Singapore continues to be its main hub, although the firm now has offices in Australia, Hong Kong, Japan, Korea and most recently Taiwan as well.
Cho is less enthused when talking about the opportunities in different geographies, but instead notes that the big opportunity for M&G is growing its retail footprint, which complements its other business.
In October last year, M&G made 10 of its UCITS funds available to retail investors in Singapore for the first time following recognition from the Monetary Authority of Singapore.
In March this year, it also announced a partnership with OCBC to distribute its Optimal Income strategy to retail investors.
When asked why M&G is placing so much focus on growing its retail business in particular, Cho cites the importance of being able to serve the entire wealth continuum.
“I think even if you look at the retail bank channels or even the insurance companies, they also focus a lot in developing and expanding their wealth management platforms,” she said.
“So, if you look at the clientele as a continuum, the mass retail, the mass affluent then the high net worth, it’s important that as a product investment service provider we enable access to this whole space for the M&G suite of capabilities.”
Types of strategies
When asked which types of strategies resonate with investors, Cho is quick to point to income, which echoes comments from a lot of other asset managers who have noted the psychological appeal of regular payment streams for Asian investors.
“I think people like the peace of mind of having a monthly distribution and at the same time seeing some growth in the capital. So, this leads to why we’re very confident to expand from private bank distribution into retail,” she said.
In particular, Cho cites the firm’s Optimal Income strategy as one of the products which has resonated most with investors, having been the product that is available for distribution through the firm’s partnership with OCBC.
However, Cho notes that the appetite is broader than just income as several of the firm’s growth strategies have also fared well with investors, particularly their India and Japan strategies, which is unsurprising given how popular both markets are at the moment.
Cho also notes that on the multi-asset side, the firm has a daily dealing, liquid hedge fund, which has proved popular with investors recently, although she notes this is only available through private banks.
On the institutional side, Cho cites M&G’s expertise in private markets as being a unique selling point given that some of the more sophisticated institutional investors have been rapidly expanding their allocations to private markets in recent years.
Group changes
The backdrop to M&G’s expansion efforts in Asia is the wider changes to the group with new CEO Andrea Rossi announcing a whole host of changes since taking up the reins, particularly to personnel, with Joseph Pinto brought in as CEO of the asset management division.
The biggest change announced by Rossi though has been his cost savings programme, with M&G planning to shed £200m ($266.3m) in expenditure by the end of 2025, although Cho is adamant that the impact has been to free up resources elsewhere.
“I wouldn’t say we’re the only beneficiary but I would say when we look at the streamlining, the cost savings, whatever the cost savings that we’ve managed to accomplish, the savings are not for nothing. The savings are to help us recycle and redeploy those resources and to support growth. I think that’s what the firm wants to accomplish,” she said.
M&G was also the subject of takeover rumours a few years ago from Schroders, something which Cho is tight-lipped about despite the fact that she was at Schroders at the time the acquisition was mooted.
She did state however that while the firm’s focus was on organic growth, she would not rule out the possibility of bolt-on acquisitions if it made sense.
“I wouldn’t rule out the possibility because we talk about speed-to-market and while we can incubate, it obviously takes time. But by M&A, if that means immediately there’s a platform that will create more synergies, that will improve the speed to market,” she said.
Group structure
One of the other unusual aspects of M&G is its business structure, comprising a combination of an asset management business, a life insurance and pensions business, and a financial advice business.
The mooted acquisition with Schroders would have actually seen the combined firm ditch the latter two businesses and focus its attention on just the asset management business, although Cho reckons that there are important synergies between the different groups.
In particular, she notes the firm’s experience with its retail business is crucial given M&G’s plans to expand its retail distribution partnerships in Asia, although she concedes that the retail market in the UK is very different given the role of independent financial advisers there.
“The experience of us in servicing retail in the UK certainly helps. We have the mindset. We have the know-how to service the retail. Then of course the retail in the UK is different from the retail in Asia, but the principle is the same in Asia,” she said.
With regards to the life insurance business, she also notes that this has been crucial in helping incubate some of the firm’s private market strategies, in particular for clients given their experience in managing these strategies for the life insurance portfolio.
“The life insurance portfolio is pretty much managed by M&G. Because of that, we have a need to incubate private market capability. Now we’re commercialising that capability to introduce it to third parties. We’re confident that we’re very well-placed given the experience we already have in-house,” she said.
