Growing investor sophistication will impose greater demands on fund firms, as Asia's middle class expands and pension schemes are reformed, argued panelists at an AsianInvestor forum.
Munirah Khairuddin, CIMB-Principal Asset Management
Asian asset managers must up their game to tap opportunities that the region’s growing middle class and pension reforms will present in the near future, argued panelists yesterday at AsianInvestor's Women in Asset Management forum.
Asian banks could increasingly capitalise on the emerging middle class to develop their wealth management businesses, says Munirah Khairuddin, chief executive of CIMB-Principal Asset Management based in Kuala Lumpur.
And Malaysia’s fund houses – especially the eight approved to provide retirement saving solutions for the country’s private retirement scheme (PRS), including CIMB-Principal – are an important additional pillar to the public pension sector, she notes.
Launched in July 2012, the PRS is a voluntary saving scheme that complements mandatory contributions to the country’s state-backed Employees Provident Fund.
“A lot of Asian markets, including China, India, Malaysia and Thailand, are looking into structural reform of their pension systems,” says Khairuddin. “There is a lot of pressure on public pension schemes to manage risks properly. There is a real need for private pension providers to support ... the economy.”
The Asean fund passport scheme – backed by Malaysia, Singapore and Thailand – will also present opportunities, she adds.
Expected to go live later this year, the Asean cross-border fund distribution initiative requires participating fund firms to have a five-year track record and at least $500 million in assets under management.
However, investors in these markets are becoming increasingly sophisticated, says Khairuddin.
Investor sophistication and the middle class is growing in Asia, as is demand for fund manager transparency, agreed Jo Murphy, managing director for Asia Pacific, Europe, the Middle East and Africa at the Chartered Alternative Investment Analyst Association.
With larger hedge funds growing as smaller managers find it harder to attract assets, fund trustees and allocators will continue to allocate capital to trusted advisers, said Murphy, speaking on the same panel. “Allocators will recognise brands as they look to diversify into higher-alpha investments."
Asian asset management industry expansion will be underpinned by strong economic growth, says Maria Theresa Marcial-Javier, head of the asset management and trust group of the Bank of the Philippines Islands.
Despite capital outflows late last year and early this year, economic growth in Asean countries has a long way to go, she said, adding that GDP growth in Asean countries will continue to trend above that of developed markets.
“In the Philippines, AUM growth has been more focused on the retail space,” notes Javier. “We expect middle-class saving and investment over the next couple of decades to present more opportunities for the asset management industry.”
Assets under management in the Philippines expanded at a compound annual growth rate of 15% over the past decade, she added.
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