Asian asset managers are setting their sights on expanding outside their home borders, while overseas funds are looking to gain a foothold in the region, says Bill Gourlay, head of RBC Dexia’s global product strategy for the fund management sector.
RBC Dexia, a 50-50 joint venture between Royal Bank of Canada and Europe’s Dexia Group, provides custody, transfer agency and fund administration services, among other things. Asia accounts for about 5% of the firm’s global sales, leaving ample room to grow, particularly as greater numbers of overseas asset managers are looking to expand into the region.
"More European firms have stopped talking about an Asian strategy and are talking about country-level strategies,” notes London-based Gourlay, who oversees the product offerings and distribution strategies of RBC Dexia’s asset-management clients on a global basis.
Hong Kong, Singapore and Taiwan are among the initial markets for entry, he adds, with China and South Korea expected to open in the future.
The challenge comes in dealing with different regulations and registration processes in each separate jurisdiction, but the market potential is too great for overseas fund managers to ignore, says Gourlay. “There are some very expansive opportunities in this part of the world,” he says, referring to Asia.
This is something Asian firms have also noticed. “There’s an interesting flux at the moment, where Asian fund managers are going cross-border into markets such as Taiwan and Singapore,” says Gourlay. "You’re going to see more [services] coming through from China."
Some Asian managers are looking further afield to gain a greater global presence, he notes. One successful example he cites is South Korea’s Mirae Asset. “Over three years ago, nobody from the rest of the world had heard of them,” he says, noting that the firm now has offices in the US, UK and Brazil and offers Luxembourg-domiciled funds.
“We’re seeing how we can help Asian fund managers to [expand globally],” says Gourlay, who adds that more funds in the region are looking at Ucits and Sicav structures as a way of gaining entry to markets such as Europe.
Exposure to a new region not only provides Asian funds with an opportunity to bring in fresh capital, but also an investor base with a longer-term outlook.
In Asia, there is a high turnover in trading activity on fund investment portfolios. “The average investment period of most holdings is three to six months in some funds. In Europe, it’s three years,” says Gourlay. Funds appear to be “a great vehicle for gambling” for regional investors, he quips. "It will be interesting to see how fund portfolios evolve."
Meanwhile, RBC Dexia has been expanding its Asia team, with the most recent addition being Andy Ki, who has joined as director of relationship management for Hong Kong. Ki, previously Asia-Pacific head of operational risk and business continuity at State Street Global Advisors, will head RBC Dexia’s growth strategy in Asia for onshore and offshore clients.
The role, taken up by Ki on March 21, was created to capture growth and expand the firm's footprint in the Asia-Pacific region, says Brent Reuter, managing director for Hong Kong at RBC Dexia Investor Services.
Moreover, RBC Dexia in late March announced an alliance with Calastone, a global messaging and settlement transaction network, to increase investment funds automation in Asia, a process that is becoming increasingly prevalent in the region. (See also page 16-17 of AsianInvestor's Securities and Fund Services supplement published this month.)