Beijing has been opening its markets to foreign investment and involvement with startling speed in the past few years, and asset managers have been ramping up their mainland exposure and building their teams accordingly. And some large asset owners have been doing likewise.
It was in 2017 that this frenzy reached fever pitch, as the number of foreign fund houses with onshore investment management entities and licences accelerated, and their expansion plans grew in ambition. They have realised that running a mainland unit with three or four staff is no longer sufficient, especially when their ultimate target is to tap the country’s huge mass-retail market.
It’s interesting to see how asset managers’ hiring approaches varied in 2017.
Early mover Fidelity has relied heavily on in-house staff—for instance, naming seven-year company veteran Jackson Lee as its country head in January and staffing its Shanghai wholly foreign-owned entity (WFOE) mostly with internal transfers. Neuberger Berman, by contrast, poached Patrick Liu from local joint venture HFT Investment Management to build and run its team in Shanghai.
What is a common challenge for all foreign players is that it is getting increasingly difficult and expensive to source suitable talent as demand rises.
BlackRock and Schroders—which each received their PFM licences on December 25—said in January that they have eight and 10 staff in their investment management WFOEs, respectively, and plan to increase those headcounts.
Fund houses are also competing with asset owners for mainland personnel. For instance, Canada Pension Plan Investment Board poached Goldman Sachs Asset Management’s head of China equities, Alina Chiew, in late 2017.
The hunt for China talent is only going to intensify this year, agree headhunters. Foreign flows into mainland securities will steadily rise as the local bond and equity markets continue to open. The number of firms seeking market entry is still growing. One recruiter suggested there could be 50 IM WFOEs by end of 2018, up from 25 now. The maths is simple.
The growing importance of China is just one key hiring trend to monitor in the year ahead.
Institutional investors, fund managers and consultancies had a turbulent 2017, amid a need to raise expertise in new asset areas, cut cost bases and maximise investment capabilities.
AsianInvestor has identified five areas of hiring that will have major ramifications for the region’s institutions for the months ahead.
Besides China, these are: the rise of tech spending; Asia’s insurance industry shakeup; the march of multi-asset strategies; and regional investment consultancy restructuring.
There were other important themes we could easily have singled out. Asset and wealth management industry consolidation is a global phenomenon, and there is little doubt more mergers, cutbacks and retrenchments are to come, in the region and beyond.
Meanwhile, some large asset owners continue building in-house capabilities at home and overseas, particularly in direct investment and private market expertise. Three notable examples last year were German insurer Allianz ramping up its real estate team; Canada Pension Plan Investment Board boosting its Asia principal credit team and Korea’s National Pension Service adding illiquid investment talent in London, New York and Singapore.
But we feel the five areas we identified are of particular strategic importance to Asia’s key investment players.