Capital Group, the Los Angeles-based money management heavyweight, is counting on strategic partnerships focused on multiasset-class investing to help transform the firm's thin presence in the Asia-Pacific region into something more muscular.
As of Sept. 30, less than 1% of Capital's US$1.38 trillion in assets under management was managed on behalf of Asia-Pacific clients. Other large firms, including Pacific Investment Management Co., Goldman Sachs Asset Management, J.P. Morgan Asset Management and Franklin Resources Inc., were managing more than six times that amount.
In an interview in Singapore, Capital executives said that in the past six months their firm has begun to add resources in the region in an effort to raise its profile as well as its AUM.
The private firm's executives and partners are all “committed to building Capital's presence in Asia,” said Andrew Economos, senior vice president, strategic solutions. In May, Mr. Economos left his post as J.P. Morgan Asset Management's Hong Kong-based managing director of asset management and head of sovereign and institutional strategy to lead Capital's efforts in the region.
Capital will pursue business opportunities across all client segments in Asia, but Mr. Economos said its initial focus will be on institutional investors and sovereign wealth funds, which he called “important decision-makers and thought leaders” in the region.
While declining to provide specific targets, Mr. Economos said Capital's qualitative goal of “becoming relevant in Asia” means that over the next five to 10 years, “we're going to have to grow considerably.”
Capital's push in Asia comes at the close of a difficult decade for the firm, which saw a flood of inflows from retail and institutional investors alike — on the back of consistent outperformance — turn to outflows starting in 2004, after performance stumbled. The company's change of fortunes was particularly pronounced on the institutional side, with AUM at Capital Guardian Trust — the group's former U.S. institutional arm — plunging to $43.5 billion at the close of 2012 from $162.1 billion at the end of 2004.
As of Sept. 30, eVestment LLC data showed more than 91% of Capital's $1.38 trillion in AUM in retail mutual funds, followed by 5.3% in separate or segregated accounts and 3.5% in pooled funds.
Mr. Economos said his due diligence earlier this year, when deciding whether to join the firm, showed that Capital had successfully “rebooted” between 2007 and 2010, maintaining the essence of its successful asset management culture even as it shook up some of its fund management teams and brought some new ideas to the table.
Now, he said, some institutional clients who parted company with Capital during the global financial crisis are “coming back to us.” He declined to name them. However, the latest annual review by Japan's ¥130.9 trillion ($1.1 trillion) Government Pension Investment Fund showed the GPIF awarding the firm a more than $2 billion Japanese equity mandate around March 31.
“We want to make sure we have relevance with the KICs, HKMAs, the CICs and the SAFEs of the world,” he said, referring to the $72 billion, Seoul-based Korea Investment Corp., the US$400 billion Hong Kong Monetary Authority and Beijing's $653 billion China Investment Corp. and $568 billion State Administration of Foreign Exchange.
Capital will focus “on a few strategic partnerships where we think we can add a lot of value,” he said. The firm could announce some key relationships “fairly soon.”
The multiasset-class space, which Mr. Economos called a long-standing focus of Capital's, will be the foundation of those strategic partnerships, and a key to the firm's business plans in the region.