Posted inRegulation

The R word

Fund selectors and wealth management professionals attending FSA's Fund Selector Forum last week in Hong Kong overwhelmingly said regulation is the biggest challenge facing their business.
Fund Selector Asia

The vote, in which 78% chose regulation, suggests that the topic will remain top of list at private banks and wealth management firms for some time.

With a proposal by Singapore’s regulator for stricter rules on advising private clients and overall increasing compliance requirements, regulation as a hot topic is unsurprising.

The participants chose as their second biggest concern the lack of quality funds to invest in (11%).

At the forum, dozens of fund selectors from institutions such as ANZ Private Bank, Bank of Singapore, Banque Privee Edmond de Rothschild, Coutts, Credit Suisse and Julius Baer, participated in anonymous voting on key questions.

Turning to fund selection, 65% of voters said alpha generation was the most important factor in assessing a new fund, followed by the lead portfolio’s manager’s track record (22%).

Not enough babies

Several questions were framed around sentiment toward developed markets versus emerging markets. The latter seemed to be most popular, as 77% of fund selectors said they would be increasing their exposure to EM equities over the next 12 months compared to 42% for European equities.

Emerging market debt seemed to have some popularity as well, with 48% saying they would increase exposure over the next 12 months and 22% expecting to keep exposure the same.

“A big question is, why bother with emerging markets?” said Laurentius Harrer, portfolio manager, Capital Group, who spoke at the Forum. “Because emerging markets are where the growth is, not Europe.

“[GDP] growth is about population growth times productivity growth, and Europe does not make babies. Italy is the most baby-friendly place and it has the lowest birth rate in the world.

“It’s good to remind ourselves of that.”

Part of the Bonhill Group.