HONG KONG - To exploit the mutual fund business in the Asia-Pacific region, Fidelity Investments Management (H.K.) Ltd. is eyeing Asian countries, many of which are liberalizing their financial markets. The new chairman of the Asia-Pacific, Stuart H. Leckie, believes he will be able at least to triple Fidelity's funds managed in the region to $60 billion through these expansionary efforts.
To some degree, expansion might be achieved by just standing still. The Hong Kong Investment Funds Association recently reported net sales of unit trusts in Hong Kong doubled to U.S.$153 million during the first 10 months of 1995 - a 125% increase from the same period in 1994.
But Mr. Leckie, the former chairman of the Wyatt Co. in Hong Kong said he will take the next six months to learn the business and the company before formulating a definite game plan. He will study Fidelity's human resources, property, operation in up to 15 markets in the region, its mutual funds business, business development and new business. He also will scrutinize group performance and determine whether Fidelity has the resources to ensure good performance continues.
The institution's game plan typically has rested on finding local partners or banks through which it markets mutual funds. The company has links with 19 banks in Hong Kong and 34 in Taiwan. Mr. Leckie will seek to expand this network of alliances.
The chairman will concentrate on the firm's retail business, as well as the institutional business.
Fidelity now has 200 staffers in the Asia-Pacific region, with 40 investment managers in Hong Kong. In the next six months, Mr. Leckie will determine whether Fidelity has the number and concentration of research people and fund managers it requires. Fidelity will hire or transfer staff from the United States or the United Kingdom.
"It's not easy to dramatically increase market share in the U.S. We have to look outside. The Asia-Pacific region is of special interest," he said. "Success does not depend on the competition's lack of success, but on expansion of the whole market."
Fidelity manages $20 billion in Asia, almost evenly divided between retail and institutional business; this business is also split between Japan and the rest of Southeast Asia, the latter is the area Fidelity wants to expand. Of the total, $6 billion alone emanates from Hong Kong.
Fidelity established an office in Tokyo in 1969 and in Hong Kong in 1981. Currently, it has a small office in Singapore. It will open an office for institutional business in Sydney this year. In the next five years, these four offices will be its investment centers - offices staffed with analysts - for the region. The Taipei office will be a service center.
The Sydney office holds special interest for Fidelity. The company had a retail mutual fund operation in Australia between 1989-1991, which, because it was not selling, the company sold to Perpetual (Australia), while continuing to manage the assets. Now, Fidelity wants to exploit the institutional side of the business Down Under.
Recent pension legislation in Australia that created a compulsory pension system was the incentive to open an office there.
Why would Fidelity hire a former actuary as its regional chairman? Mr. Leckie has been in Hong Kong since 1979, making him familiar with the local investment community. He had spent 12 years in the U.K. insurance industry as director of Swiss Pioneer Liberty in charge of investment. At Wyatt, he measured investment performance through attribution analysis, that is, determining asset allocation between stock selections, cash and timing. He was extremely involved with outside investment managers. In his new position, Mr. Leckie said he was going to take a "helicopter view" of Fidelity's operations in Asia.
