Money managers with far-flung investment capabilities in Asia say big regional footprints are helping them garner institutional assets amid growing investor demand for more geographically specialized investments.
Executives at firms with investment professionals on the ground in a region that spans Japan, Australia, Hong Kong, Singapore, China, South Korea, Malaysia, Taiwan, India, Thailand, Indonesia, the Philippines and Vietnam point to a pickup in institutional demand for allocations to the region or segments of it, as well as single-country mandates.
Sovereign wealth funds, both at home and abroad, and national pension systems in the region are helping to drive that trend, market veterans say.
As the influence of traditional benchmark indexes has waned, a growing number of big institutional investors have sought emerging markets exposure beyond what those benchmarks call for, or have opted to hire best-in-class managers for Asia, noted Abhi Shroff, a managing director in Singapore with Greenwich Associates.
Information released by China's State Administration of Foreign Exchange regarding quotas awarded to qualified foreign institutional investors for investments in local Chinese securities provide one barometer of that trend. In January, the SAFE extended a $500 million QFII quota to the Abu Dhabi Investment Authority, its third in four years, and a $700 million quota to the Kuwait Investment Authority, its second over the past year. The previous quota for each sovereign wealth fund had been $300 million.
Schroder Investment Management Ltd., Franklin Templeton Investments (Asia) Ltd., Invesco Ltd., Manulife Asset Management, BlackRock Inc., Nikko Asset Management, Aberdeen Asset Management and Eastspring Investments are among those fielding broad Asian investment capabilities to pursue institutional as well as retail business opportunities in Asia.
Having investment teams in nine markets in Asia has helped Schroder Investment Management meet rising institutional demand for regional and subregional allocations — for example, to north Asia or emerging Asia — as well as single-country allocations to markets such as China, said Lester Gray, Schroders' Singapore-based chairman, Asia Pacific.
Andrew Lo, senior managing director with Invesco and Hong Kong-based head of Asia-Pacific operations, cited similar trends: The ability of Invesco's local investment teams to handle country-specific institutional separate accounts, with customized benchmarks, as well as balanced, multiasset-class strategies, has helped the firm pick up “healthy institutional books of business” in markets such as Hong Kong and China, he said.
Meanwhile, the continued evolution of pension systems in countries such as Taiwan and South Korea is spawning institutional opportunities in those markets for firms such as Schroders that have local teams capable of offering single-country strategies there, Mr. Gray said.