<!-- Swiftype Variables -->


Greenwich: Asian institutional asset growth stalling, even as outsourced assets grow

A Greenwich Associates survey of large institutional investors in Asia ex-Japan found a decade of steady growth of institutional assets in the region stalling over the past year, even as investors continued to outsource a bigger chunk of their assets to external managers.

The survey of 124 large institutional investors in Asia, conducted during the first quarter of 2017, showed total institutional assets of $12.5 trillion, up only marginally from $12.4 trillion a year before.

Over the prior four years, annualized growth for institutional assets in the region had exceeded 10%.

Greenwich tied the past year's stark deceleration to heavy spending by China to support its renminbi in currency markets, which "eroded the country's account surpluses" and interrupted the buildup of institutional assets in the region.

Even so, opportunities in the region for external money managers continue to improve as investors outsource a growing chunk of existing assets, the survey contended.

Markus Ohlig, a managing director in charge of Greenwich Associates' investment management practice in Europe and Asia ex-Japan, said in a telephone interview the weight of outsourced institutional assets in the region climbed to 19% in the most recent survey from 18% the year before. For the four years before that, outsourced assets had ranged between 15% and 16% of total institutional assets.

And while the absolute increase in those outsourced assets "isn't so big," much of the mandates issued by the biggest investors in the region are focused on "high-octane" investments, which can lead to "quite interesting" revenue opportunities for managers, said Mr. Ohlig.

Investors are shifting much of those assets out of domestic fixed income, which accounted for 24% of institutional portfolios in Greenwich's latest survey, down from 36% in 2010.

Meanwhile, a growing number of institutional investors in the region, beyond the 20 to 30 bulge-bracket asset owners money managers had focused on exclusively in years past, are beginning to outsource to external managers as well, he said.

The survey concluded that "future outsourcing opportunities are more likely to come (from) midsize institutional investors."

The survey showed China with a region-leading pool of $5.4 trillion in institutional assets, of which $795 billion has been outsourced to external managers.

The next biggest market was South Korea, with $2.2 trillion in institutional assets and outsourced assets of $666 billion.

Hong Kong/Macau, Taiwan and Singapore formed the next tier, with roughly $1 trillion in institutional assets each. However, at $472 billion in outsourced assets, Hong Kong/Macau has provided external managers with just under three times as much business as Taiwan and Singapore.