The fund firm most heavily invested in Asia

State Street Global Advisors topped AsianInvestor’s rankings of fund houses by absolute assets invested in Asia Pacific. Now it is aiming to increase its penetration and presence.

The fund firm most heavily invested in Asia
Ting Li sees Asia fixed income as very important

State Street Global Advisors (SSgA) is the only fund house globally with more than $300 billion invested in Asia Pacific, with the firm reshaping its regional capabilities as a priority.

The asset management arm of State Street Corporation has $302 billion invested in the region, putting it ahead of the even the big trust banks in Japan, according to AsianInvestor’s recent ranking of fund firms by assets invested in the region (see the magazine’s June issue). That represents about 14% of its global asset base of more than $2 trillion.

Some 90% of SSgA’s assets globally are invested passively, although Ting Li, the firm’s head for Asia ex-Japan, explains it is also seeking to increase the Asia portion as a percentage of its global exposure – recognising the region’s strong growth potential.

“We have seen a huge increase [in assets] in our Pan Asia Bond Index Fund (PAIF),” Li notes, pointing to the volatility of global equity markets post the sub-prime crisis as against the higher return potential of emerging markets.

“Asia fixed income is very important, especially now with the RQFII [renminbi-denominated qualified foreign institutional investor] scheme. We are seeing flows into Asia Pacific and emerging markets in general. The job for us now is making sure we have all the investment capabilities available.”

She notes that SSgA is moving to strengthen its fixed income and equity capabilities in Asia by adding investment professionals and is looking to hire product development specialists on the exchange-traded fund (ETF) side.

SSgA has a regional active trading desk in Hong Kong as well as an active emerging market equity team and an active developed market investment team. Further, it has a passive equity investing team in Hong Kong and fixed income personnel in Singapore.

“We realise that Asia as an investment destination is getting more important,” says Li. “We will invest more in this region in terms of investment capability and promote investing in Asia more as a theme.”

SSgA recently underwent a senior staff reshuffle globally as part of its drive to expand its equity and credit product lines in both active and passive investments, as reported.

It promoted Lochiel Crafter (pictured left) as its new Asia-Pacific head based in Sydney, succeeding Bernard Reilly, who relocates to take on the role of global head of strategy for SSgA in Boston.

Replacing Crafter as head of investments for Asia Pacific is Kevin Anderson, who was previously CIO and head of fixed income based in London. He relocates to Hong Kong.

“We want to continue to build our business in areas where we can add value,” says Crafter. “We see increasing demand for emerging market debt exposure.”

One market that SSgA has been prioritising is China, and it recently joined forces with Zhongrong International Trust, which boasts a strong distribution presence in wealth management products.

Their joint venture, SSgA Fund, became the 81st fund management company in China on June 17, as reported. It has registered capital Rmb300 million ($49 million) and can launch and sell funds and engage in asset management and segregated account business.

Its general manager is Li Xuesong, who previously served as deputy general manager at Bosera Funds. The venture will have about 50 staff overall, including 20 investment professionals, confirms Li.

“There is a huge population of wealth management products and we want to build our brand [in China],” Li adds. “Pension reform will drive growth in the market, and our heritage is in managing pension funds and ETFs. It is one of the reasons we are entering the market.”

SSgA received a $50 million qualified foreign institutional investor (QFII) quota in 2009 and Li notes that it plans to apply for more.

¬ Haymarket Media Limited. All rights reserved.

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