AI100: Alts, multi-asset drive AUM growth in Asia

Demand for multi-asset strategies as well as alternatives such as real estate and hedge funds has driven up assets for fund managers in the region, AsianInvestor's latest AI100 survey shows.
AI100: Alts, multi-asset drive AUM growth in Asia

Increasing demand for alternative and multi-asset strategies has helped to boost asset growth for several global fund houses in Asia, according to AsianInvestor’s latest survey on the biggest asset managers in the region.

Our annual AI100 list tracks the Asia-sourced assets under management (AUM) of the leading global, Japanese and Asia ex-Japan fund houses. 

In the 12 months to September 2017, the top 10 asset managers were a mix of Japanese, global and Chinese firms, according to the survey, which revealed a number of key findings.

With $528 billion in Asia-sourced assets, global giant BlackRock snatched pole position from Japan’s Asset Management One, pushing it down to second with $490 billion in AUM. 

Total AUM sourced from Asia was estimated at $9.95 trillion, up 11% from the same period last year.

Global firms' share of Asia-Pacific AUM has risen; they accounted for 50% of all AUM from Asia Pacific over the period analysed, up from 47.5% a year ago. Within the global fund houses, US firms accounted for 56% of Asia-sourced assets.

Moreover, asset managers offering multi-asset solutions – which employ asset allocation in addition to individual asset class strategies – were among the big winners.

JP Morgan Asset Management, which climbed two spots from last year to 14 in the latest survey, saw strong inflows into multi-asset strategies.

“We expect to continue to see strong inflows into multi-asset strategies, including balanced risk strategies and non-correlated absolute strategies,” Michael Falcon, chief executive of global investment management for Asia Pacific at JP Morgan AM, told AsianInvestor.

JP Morgan, which saw its Asia Pacific AUM rise by 13.2% to $171 billion, sees demand for such strategies coming largely from institutional investors, including pension funds and insurance companies.

Another gainer, HSBC Global Asset Management, which jumped up ten places to 16 in the AI100 rankings on the back of 17.5% growth in AUM, is equally bullish on multi-asset products. 

Pedro Bastos, chief executive of Hong Kong and head of Asia-Pacific, told AsianInvestor: “We believe multi-asset funds will gain popularity as investors seek products that are best at diversifying risks and protecting them against the increased market volatility,” 

Institutional investors have been showing an increasing appetite for multi-asset. In November 2017, for instance, the Philippines' Government Service Insurance System (GSIS) issued a request for proposal to hire two external asset managers to oversee their $800 million multi-asset strategy.

Hiring trends in Asia have also revealed increasing demand for multi-asset specialists, with many global asset managers either expanding or initiating regional multi-asset teams in the last year.


The hunger for better yield has also seen investors head towards alternatives.

In two recent examples of many, HSBC Insurance in Hong Kong told AsianInvestor that they were interested in increasing their holdings in alternative assets, while Japan’s Kewpie Pension Fund has said it aims to raise its alternatives allocation from 10% to 15%.

Interestingly, even California-based fund house Pimco, best known for its fixed income strategies, has seen its AUM growth driven partly by higher interest in alternative assets from investors in the region.

Its Asia-sourced AUM grew 14.9% to $207 billion in 2017, which helped it retain ninth spot in the AI100.

“Pimco’s alternatives presence has grown meaningfully across the hedge fund and private equity space with both institutional and wealth management clients increasingly looking at alternatives for diversification and risk management,” Kim Stafford, Pimco’s head of Asia Pacific, told AsianInvestor.

Moreover, UBS Asset Management cited the shift towards alternatives for diversification and risk management as a key factor in its AUM growth. Its Asia-sourced AUM expanded by 12.8% to $176 billion.

Rene Buehlmann, head of Asia Pacific at ths Swiss fund house, told AsianInvestor: “Hedge funds and real estate have become increasingly popular sources of alternative income and have generated significant inflows.” 

“This [alternatives] is where institutional investors will go in an environment when volatility comes back. In addition, when interest rates start rising, they are also looking for more diversified sources of income,” Buehlmann added.

None of the asset managers provided details on how much alternative or multi-asset strategies accounted for of total inflows for the period analysed.

But the trend seems set to continue. A February 2018 global survey by Natixis Investment Managers found that three-quarters of Asia-Pacific institutional investors believed alternatives investing was necessary to diversify portfolio risk, while 52% of respondents said investment in alternatives was essential to outperforming the broader market.

The complete list of the top 100 asset managers in the Asia Pacific will be released in the April/May issue of AsianInvestor magazine.


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