UBS Global AM focuses on Japan
Asia-Pac head Christof Kutscher says the firm is keen to be viewed as a 'local' player in Japan and other Asian markets, and sees the most growth from third-party wholesalers.
The wholesale channel is the biggest potential source of growth for UBS Global Asset Management in Asia, particularly Japan, says Christof Kutscher, managing director and head of the firmÆs Asia-Pacific business.
UBS Global AM overall sources a respectable $108 billion of assets from Asia-Pacific (as of September 2007, according to AsianInvestor magazine), with $31 billion derived from Japan, $54 billion from Asia ex-Japan and $23 billion from Australia/New Zealand.
Kutscher was reluctant to look at the business in terms of AUM, however, saying his focus is elsewhere û on profitability, of course, but also on seeing UBSÆs image become that of a leading local player in the key Asian markets, not just as the manager of foreign assets.
For example, over 90% of the assets the firm manages in Japanese investments are non-Japanese (although the portion of Japanese clients is higher). ôHistorically we have neglected building our local capabilities,ö he says.
But this is changing. The firm has recently hired a well-known Japanese fixed-income manager, Takashi Asano, who made his name at Tokio Marine Asset Management. ôWe need our local investment capability to raise our profile, and that will really drive asset-gathering and revenues,ö he explains.
Kutscher has been running the Asia-Pacific operation for over four years, which included leading joint ventures in China and Korea. It took a 49% stake in Shenzhen-based China Dragon Fund Management, a unit of ChinaÆs State Investment Development Corporation, and in January 2008 it sealed a 50/50 JV with Shanghai property developer Gemdale to build housing in China. Last year it took a 51% stake in Daehan Investment Trust Management, a unit of Hana Group that has been rebranded Hana UBS Asset Management.
India remains the regionÆs last big market where UBS Global AM has no on-the-ground presence for funds, although it does have a real-estate joint venture. Kutscher says he expects to forge a deal in asset management over the next 12 months.
But for now, Japan is his focus, which explains why he relocated his formal seat of operations to Tokyo last year. He says in the past year, UBS Global AMÆs expansion among wholesale distributors has been ôthe fastest growing in Japanö, with plenty of fund launches, including products for Brazil or China equities, climate-change investment themes and asset-allocation products. These have all been retail-focused products sold via the biggest securities companies.
Secondly, the firm has found its business in alternative products growing, including funds of hedge funds, infrastructure, and real estate, particularly among institutional clients such as banks and insurance companies. Kutscher acknowledges the firm has lost institutional mandates but says inflows into alternatives have led to rising profits and revenues.
To make these gains sustainable, he says the key is to localise management. ôMy mission is to reposition the business and implement local leadership,ö he says. ôI am mentoring some of our internal people.ö He says the challenge is simply grooming Japanese executives to become more comfortable and assertive when dealing with peers in the global organisation, to make sure they fight their corner for resources or liaise more effectively with, say, analysts or IT specialists around the world.
Kutscher says the wholesale channel push is not limited to Japan, but is regional. ôThis requires a cultural change,ö he says, noting UBSÆs traditional clientele has been institutions and private banks (its single biggest client is UBS Wealth Management). He says results will be evident as the firm sells more retail mutual funds in markets such as Indonesia, Malaysia, Thailand and Vietnam.
But that also means if global economies and markets worsen, with rising energy inflation, investors will want to rotate out of equities. But for now the firm expects markets to stabilise.
UBSÆs retail product pushes have cooled off this year because the markets have been poor (ôInstitutional business is about alpha, the wholesale business is more about beta,ö Kutscher notes.) but now the firm is cranking this up again. While last yearÆs theme for retail was all about chasing returns in sexy markets such as Vietnam, now the story is more diverse. The firm will be rolling out retail products with themes as varied as high-dividend stocks, emerging-market debt, and certain single-country themes that remain popular such as Brazil.
The firm is also building local investment capabilities, mainly by transferring experienced fund managers from London or other centres to China, Korea, Singapore and Hong Kong, for example. ôWe are looking at real estate, infrastructure and hedge funds in these markets,ö he says. Some of the gaps remaining: Korean real estate and China infrastructure.
UBS Global AM overall sources a respectable $108 billion of assets from Asia-Pacific (as of September 2007, according to AsianInvestor magazine), with $31 billion derived from Japan, $54 billion from Asia ex-Japan and $23 billion from Australia/New Zealand.
Kutscher was reluctant to look at the business in terms of AUM, however, saying his focus is elsewhere û on profitability, of course, but also on seeing UBSÆs image become that of a leading local player in the key Asian markets, not just as the manager of foreign assets.
For example, over 90% of the assets the firm manages in Japanese investments are non-Japanese (although the portion of Japanese clients is higher). ôHistorically we have neglected building our local capabilities,ö he says.
But this is changing. The firm has recently hired a well-known Japanese fixed-income manager, Takashi Asano, who made his name at Tokio Marine Asset Management. ôWe need our local investment capability to raise our profile, and that will really drive asset-gathering and revenues,ö he explains.
Kutscher has been running the Asia-Pacific operation for over four years, which included leading joint ventures in China and Korea. It took a 49% stake in Shenzhen-based China Dragon Fund Management, a unit of ChinaÆs State Investment Development Corporation, and in January 2008 it sealed a 50/50 JV with Shanghai property developer Gemdale to build housing in China. Last year it took a 51% stake in Daehan Investment Trust Management, a unit of Hana Group that has been rebranded Hana UBS Asset Management.
India remains the regionÆs last big market where UBS Global AM has no on-the-ground presence for funds, although it does have a real-estate joint venture. Kutscher says he expects to forge a deal in asset management over the next 12 months.
But for now, Japan is his focus, which explains why he relocated his formal seat of operations to Tokyo last year. He says in the past year, UBS Global AMÆs expansion among wholesale distributors has been ôthe fastest growing in Japanö, with plenty of fund launches, including products for Brazil or China equities, climate-change investment themes and asset-allocation products. These have all been retail-focused products sold via the biggest securities companies.
Secondly, the firm has found its business in alternative products growing, including funds of hedge funds, infrastructure, and real estate, particularly among institutional clients such as banks and insurance companies. Kutscher acknowledges the firm has lost institutional mandates but says inflows into alternatives have led to rising profits and revenues.
To make these gains sustainable, he says the key is to localise management. ôMy mission is to reposition the business and implement local leadership,ö he says. ôI am mentoring some of our internal people.ö He says the challenge is simply grooming Japanese executives to become more comfortable and assertive when dealing with peers in the global organisation, to make sure they fight their corner for resources or liaise more effectively with, say, analysts or IT specialists around the world.
Kutscher says the wholesale channel push is not limited to Japan, but is regional. ôThis requires a cultural change,ö he says, noting UBSÆs traditional clientele has been institutions and private banks (its single biggest client is UBS Wealth Management). He says results will be evident as the firm sells more retail mutual funds in markets such as Indonesia, Malaysia, Thailand and Vietnam.
But that also means if global economies and markets worsen, with rising energy inflation, investors will want to rotate out of equities. But for now the firm expects markets to stabilise.
UBSÆs retail product pushes have cooled off this year because the markets have been poor (ôInstitutional business is about alpha, the wholesale business is more about beta,ö Kutscher notes.) but now the firm is cranking this up again. While last yearÆs theme for retail was all about chasing returns in sexy markets such as Vietnam, now the story is more diverse. The firm will be rolling out retail products with themes as varied as high-dividend stocks, emerging-market debt, and certain single-country themes that remain popular such as Brazil.
The firm is also building local investment capabilities, mainly by transferring experienced fund managers from London or other centres to China, Korea, Singapore and Hong Kong, for example. ôWe are looking at real estate, infrastructure and hedge funds in these markets,ö he says. Some of the gaps remaining: Korean real estate and China infrastructure.
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