Around 94% indicated they plan to offer private equity funds and 88% are planning to offer multi-strategy funds, according to the study that included 50 APAC managers.
The APAC figures are higher compared to the global average, which included 250 asset managers:
| Strategy |
APAC managers |
Global managers |
| Private equity funds |
94% |
83% |
| Multi-strategy funds |
88% |
78% |
| Real estate funds |
80% |
83% |
Source: State Street
“Asset managers are increasingly focused on developing solutions for clients’ more sophisticated needs in the region,” Mark England, head of asset management and insurance for sector sales in Asia-Pacific at State Street, said in a statement that highlights the survey results.
Alternatives are increasingly becoming more popular in the region.
In Singapore, investors continued to put capital into alternative assets, with AUM growing at around 16.9% to S$558.8bn ($408.8bn) in 2017 from S$478bn in the previous year, led by venture capital and private equity, according to the Monetary Authority of Singapore.
Southeast Asia distribution?
In terms of distribution prospects, survey findings show that 80% of Asia-Pacific managers expect they will be distributing funds in Southeast Asia in the next five years, followed by 74% who expect to have a distribution channel in Japan.
While many managers recognise the growth opportunities in China, only 60% of them believe their products will be distributed in the mainland market in the next five years.
Survey findings also show that asset managers are planning to expand their distribution platforms, with Asia-Pacific managers in particular looking at cutting out the middleman.
Sixty percent of respondents in the region, compared to 44% of total respondents, said they are keen to increase their proportion of direct sales in the next five years.
Asian fund domiciles
In terms of cross-border distribution in Asia-Pacific, managers globally consider the Singapore Variable Capital Company (S-VACC), the Asia Regional Funds Passport (ARFP) and Hong Kong’s open-ended fund company (OFC) as the most effective cross-border distribution initiatives in the region over the next five years.
Cross-border initiatives in Asia-Pacific
Source: State Street
The S-VACC, which is expected to be in place at the beginning of next year, offers a variable capital structure for a company, as opposed to current structures, such as limited partnerships and unit trusts. Hong Kong’s OFC, which was just launched this month, also offers a similar structure to the S-VACC.
Eric Roose, Singapore-based partner at law firm Withers Khattarwong, expects that the S-VACC structure will hurt Cayman funds.
“The S-VACC will initially hurt Cayman funds, which are already having some issues because European investors generally will not go into a Cayman investment structure.”
Boutique wealth and asset manager Mindful Wealth is considering re-locating its Bahamas-domiciled funds to Singapore under the S-VACC structure.
“Singapore is a well-known and stable financial jurisdiction and much more preferred by investors than other offshore jurisdictions such as Bahamas and Cayman.”
However, State Street’s survey suggests that Cayman Islands will still remain an important jurisdiction for funds, with 31% of global managers planning to set up Cayman funds in the next five years, compared to 28% in Singapore and 25% in Hong Kong.
Source: State Street
Fund passporting schemes
The ARFP, which was expected to launch this month, has not made an official announcement about the launch.
The Apec-led ARFP is a passporting programme that expects to connect the fund markets of Australia, Japan, Korea, New Zealand and Thailand.
Another passporting scheme, the Asean Collective Investment Scheme (CIS), connects the markets of Malaysia, Singapore and Thailand. However, the programme has not gained much traction, with less than 10 funds having been approved for sale by both home and host countries.
