Managers selling funds in Asia solely through distributors will soon face stiff competition as Janus, the fifth largest manager in the US, enters the field this week, aiming at snaring a market share of at least 20% with all the distributors it works with.
At the opening ceremony of its first Asian office in Hong Kong, Janus International's chief executive officer, Richard Garland, stresses the firm will not engage in direct sales in the "next few years", choosing instead to focus on building a distribution network across Asia.
"In order to help our distributors do their job, we are advertising locally in Hong Kong to build our brand name. At the moment we have 10 funds in Hong Kong that are authorized by the SFC [Securities and Futures Commission]. We're adding two new funds at the moment and they should be approved this week," Garland says.
Janus' Asian strategy is a significant departure from its business development model in the US where it has grown its assets under management by $200 billion to $290 billion in the past two years through direct sales. In the US, Janus is a household name renowned for aggressive stock-picking with a pure bottom-up approach.
In Asia, being a late-comer and less well known than many competitors, Janus will seek to strike more deals with local banks and financial advisers next year to expand its distribution network. "But for the moment we're focusing on working with a limited number of distributors and dominating their distribution systems," Garland says.
Janus' key distributors in Asia include Citibank, Merrill Lynch, HSBC, Prudential Securities and Chase. It already is the largest third party manager on Merrill's list despite their having been a partner for less than two years.
Edmund Lacis, Janus regional director in Asia, adds: "There's a whole list of reasons why selling direct is not the right way to do it right now. I used to work for another large manager who sold direct as well as through distribution. My experience is that about 80% of their business came through distribution."
Janus has been able to raise $1 billion in the past two years through its range of offshore funds. According to Garland, the manager's two best selling funds this year have been the Global Technology and Global Life-science funds. A third of the assets have come from Asian investors since their launch in March.
Of the group's $290 billion, $100 billion is invested outside the US, of which around 30% is in Asia. The manager has no Asian equity fund.
"That's deliberate," says Garland. "We want to lead with what we're good at. And we are great in investing in the US market."
In Taiwan, Janus is using Merill Lynch and Prudential Core Pacific as distributors for its two offshore funds. The manager is planning to launch an onshore fund in Taiwan next year using only one distributor, whose name Garland declines to disclose.