Affin Hwang eyes global funds for local distribution

After struggling to raise assets from European investors, the Malaysian fund house has refocused on its domestic market. It plans to have more feeder funds and is looking for external managers to partner with.
Affin Hwang eyes global funds for local distribution

Malaysia’s Affin Hwang Asset Management is putting its international expansion plans on hold to focus on its domestic distribution business.

The firm plans to launch more feeder funds and is searching for global companies to partner with.

It comes as its two Ucits funds aimed at European institutional investors face challenges in attracting flows.

Chan Ai Mei, Affin Hwang’s chief marketing officer, said competition had become a lot stiffer in Europe, and the Greek crisis had made it far more challenging to raise assets in the eurozone.

Affin Hwang was the first Malaysian fund house to have ventured into the European market with two Ucits registered funds in Luxembourg investing in Asian equities last November. The target was to raise €100 million ($110 million) in three years.

“The funds were seeded by the company and efforts have been made to market the products in Europe, although it has yet to yield results," said Chan.

“The plan now is still to focus on Malaysia and to develop our distribution channels further,” she added, conceding that it has been tough marketing in Europe, especially recently when economic sentiment in Asia has been weak. 

Affin Hwang started working with banks for fund distribution in Malaysia since 2001, an effort that proved profitable as assets raised through banks have reached RM5.8 billion. It has, however, plateaued at that level.  More new fund launches and strategic tie-ups with external managers would be necessary in order to further grow that segment of the business, she said.  

Chan said that in order to spur growth the firm has decided to reintroduce feeder funds. However, it is taking a selective approach in the wake of the global financial crisis when investors lost money as international funds failed to deliver.

To date, Affin Hwang has two feeder funds in partnership with China Asset Management (Hong Kong) and Value Partners.

The feeder fund with China AM was launched in 2011 and invests in Chinese listed equities. The feeder fund with Value Partners was launched in June this year and invests a minimum of 70% of its NAV into the Value Partners High-Dividend Stocks Fund, and a maximum 30% of its NAV into money market instruments, fixed deposits and/or liquid assets.

The Value Partners High-Dividend Stocks Fund invests primarily in higher yielding equities and debt securities while maintaining a flexible allocation to other assets in Asia Pacific with a focus on Greater China.

“Demand is still there for new products,” said Chan. Affin Hwang is considering feeder funds investing into global and European funds as well as funds capitalising on the internationalisation of the renminbi.

In an interview with AsianInvestor last year, Affin Hwang said it was preparing to distribute funds in Singapore under the Asean Collective Investment Scheme (CIS) framework.

Chan said the plan was still in place. Its original plan to passport a flagship Asian equity fund had to be shelved because of changes needed to meet the CIS framework, and the firm felt it wasn't worthwhile going through the process. It is now considering another fund for passporting into Singapore.

Affin Hwang manages assets of close to RM32 billion, of which two-thirds are pooled funds and the rest are segregated mandates. Asian Islamic Investment Management, which is its wholly-owned subsidiary, manages its sharia investments which amount to RM8 billion in total.

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