Recently merged Malaysian firm Affin Hwang Asset Management is moving to expand distribution to Europe and Singapore, as the new Asean collective investment scheme (CIS) gathers momentum.
The $9 billion fund house plans to access the Lion City's retail market in partnership via the CIS – which allows cross-border fund passporting across Malaysia, Singapore and Thailand. And it will target institutional investors in Europe as the first Malaysian manager to do so using Luxembourg Ucits structures (CIMB-Principal AM, for instance, already does so using Dublin Ucits products).
Affin Hwang AM is partnering Japanese's Nikko Asset Management on distribution under the Asean passport, which was launched in late August. This will work both ways, as Nikko AM, which has a 30% stake in Affin Hwang AM, is also participating in the scheme by exporting funds to Malaysia.
Nikko AM has itself become one of the first managers to have a fund approved by the Monetary Authority of Singapore under the CIS. It plans to launch the Nikko AM Shenton Horizon Investment Funds – Singapore Dividend Equity Fund in Malaysia with Affin Hwang AM, pending approval from the host country.
Affin Hwang AM plans to launch Asia ex-Japan and Islamic products in Singapore early next year, but has yet to decide which ones to passport, said chief strategy officer Esther Thye. The firm will also look at launching funds in Thailand, but first needs to get to know the market and establish a distribution partnership there.
For the European market, it will launch an umbrella platform with two Asian equity strategies, namely the Affin Hwang Select Asia ex-Japan Opportunity Fund and the Affin Hwang Select Asia ex-Japan Quantum Fund. These are benchmarked against the MSCI AC Asia ex-Japan and MSCI AC ex-Japan Small Cap indices, respectively.
The firm had reached a size that warranted expansion outside its domestic market, said Thye. This follows newly formed Affin Hwang Investment Bank's acquisition of 70% of Hwang Investment Management agreed in April this year. As mentioned, Nikko AM retains the 30% it held previously in Hwang IM.
While upbeat on the potential of the Asean passport, Affin Hwang AM doesn't see it providing immediate rewards, and Thye acknowledges the challenge of getting the firm's name known outside Malaysia.
"It will be a long-term investment for us, as Singapore is an open market with lots of competition," she said. "By and large, Asian investors are still brand-conscious. Brand is not easy to develop in the short term."
The firm has appointed BNP Paribas Securities Services in Luxembourg as its Ucits’ administrative registrar and transfer agent, domiciliary agent and custodian.
Affin Hwang AM was established in 2001 and runs cash, fixed income, mixed asset and equity strategies as both conventional and sharia-compliant strategies.