AsianInvestor Magazine

Issue: April 2014

A sound bet
What institution is the most sophisticated digital provider of wealth solutions? A Scandinavian bank such as Danske or Nordea, perhaps, which I’m reliably told are at the lofty end of this learning curve. But a recent conversation pointed me in a more surprising direction: betting shops. Think Paddy Power or bet365.
These businesses understood early on the importance of technology in securing customer trades. They invested in the early 2000s, at a time when private banks were resistant to the concept that digital connection to clients would become part of their proposition. Understandably private banks would balk at being associated with gambling, but there is a lot they – and asset managers – can learn about this approach.
Fund houses talk enthusiastically about the prospects of fund passporting in Asia (see page 26). But ask about the challenges, and invariably the conversation turns to distribution. They talk about the need for client education. In the same breath they talk about working more closely with distributors. But what are fund managers doing to get to know end-clients better? It seems they rely too heavily on distributors to understand client demand, to their detriment.
In the UK a handful of asset mangers are getting together in a research project to listen to end-clients. This is B to C, in business parlance. If fund firms understand end-client needs, surely that would assist product manufacturing. Digital delivery is the way to reach out. Your iPad is your broker of old: one-to-many, as opposed to one-to-one, which is a more scalable concept as both banks and fund houses rationalise offerings to save costs (see page 22). Impart thought leadership through social media blogs, create brand recognition and engage clients directly: it’s not just wealthy retirees who would read you, but professional advisers on smart phones. Of course, wealthy individuals and advisers have very different perspectives. But if you have both coordinates, you can get a better sense of industry direction.
An estimated 80% of wealthy individuals are self-directed in their investments. So what they will be looking for is ideas they can buy into. At least this is what private banks tell me. Unfortunately self-directed efforts tend to mean using funds as a tactical vehicle. But the point is, don’t focus on funds, focus on themes. The latter can lead you to end-clients.
Banks will remain vital channels: they account for 82% of retail assets in Singapore and 62.5% in Hong Kong, by Greenwich data.
Where digital is going to grow is around aggregators such as mint.com and Money Dashboard. So getting ahead in digital will be imperative. Paddy Power and bet365 increasingly look like respectable business models to study and emulate.

Leigh Powell
Editor

This Month
Contents
04    On the move
        Nomura AM names new CEO, HK SFC reappoints Alexa Lam

08    Regulatory Analysis
        Singapore RQFII potential under debate

09    Regulatory Roundup
        Korea toughens stance on mis-selling, Taiwan insurance investment limits raised

10    Data Centre
        A snapshot of Asia hedge funds in 2013

Asset owners
12    Insurers’ quest for yield: oasis or mirage?
        Asian insurers should focus more on matching assets to liabilities if their return targets are not to prove illusory.

16    Insurance investment summit: Taking the slow road to diversification

18    Q&A with Jeon Young-muk of Samsung Life

20    KIC names new CIO, GPIF in alternatives foray

Distributors
22    Battle for shelf space intensifies
        Only well-resourced managers can compete in the consumer segment, so are investor interests being fully served?

24    Fund Online Korea sets out stall, Sarasin lures Bank of Singapore NRI team

26    Fund Managers
        The future of fund passporting
        Industry experts discuss their expectations for Asia’s three passport schemes.

32    Asia’s ETF universe is expanding fast, raising questions over product complexity

36    Are investors right to bet on Europe again?

44    Will Taiwan take to employee choice for pensions?

46    M&G wins HK licence, Aberdeen acquiring, Fullerton’s expansion drive

Alternative Investments
48    Fledgling hedge fund sector takes root
        Korea’s hedge fund industry is small, but good performance is raising interest.

50    Private equity learning lessons in frontier markets

52    Q&A with Andy Seaman of Stratton Street Capital

54    IFM Investors on Asia push, China uncertainty yields PE deal discounts

Asset Services
56    Japan’s testing new trading environment
        Changing market structure is reshaping the landscape for cash equity traders and venues

60    Industry keeps faith in credit e-trading

62    Q&As: Philip York of Alt 224 and Jacqueline Loh of Schroders

63    Operations manager: Jeff Levy of Turiya Capital

64    Northern Trust opening new branches, transitions industry woes persist

Events
66    Borrowers and Investors Forum
        At this Haymarket event, fund firms stressed the need for investors to review the quality of bond issuance amid the search for yield.

68    Bookend
        The Tragedy of Liberation: A history of the Chinese revolution, 1945-57, By Frank Dikötter

Quick Poll

Should fund firms be subject to extra regulation?





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Yes, once they reach a certain size
  31%
 
Yes, they can destabilise markets
  14%
 
No, they don't hold capital
  25%
 
No, they make little use of leverage
  14%
 
Maybe, but it could cost investors
  17%
TOTAL VOTES: 36
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April 2014 Magazine
AsianInvestor Magazine

What's in this issue

Quest for yield: oasis or mirage?
The future of fund passporting
How real is Europe's recovery?
Taiwan's pensions tragedy