Baring Asset Management is exploring options for expansion in China as it looks to capitalise on the new mutual recognition of funds (MRF) scheme.
The firm is considering forming a joint venture firm, a master agent agreement for MRF, or establishing a representative or wholly-owned office, its head of distribution told AsianInvestor.
The British asset manager is also looking at Singapore, where it is weighing options for establishing a physical presence there and is hiring a sales person to cover the city-state's market.
Barings launched three Hong Kong-domiciled funds in May, which it aims to distribute in China through MRF when these funds reach the required one-year track record in 2016.
Edmund Chong, head of sales, client service and business development for Asia ex-Japan distribution, said Barings was looking at its China strategy in its totality and not just on how it could add value to the future MRF business. The firm presently conducts institutional and QDII (qualified domestic institutional investor) business in mainland China, supported out of the Hong Kong office. Sales people and other team members fly to China frequently to support the business.
Chong said that as Barings looked to grow its business on the mainland, it would become imperative to have boots on the ground; hence at some point it would have to establish a physical presence there.
“At the end of the day if you’re serious about a market you should have local guys to service that market. If we want a lucrative business in China we need to expand the team. We should be putting in more focus and resources, and that is a must,” he noted. The firm has a steering committee looking at the various options for the China business but no decision has been made yet.
Chong said that Barings preferred not to rush in. While there was a huge opportunity to grow the business in mainland China, Chong said that Barings had to balance opportunities and resources, and look at supporting the entire business in the long term.
“Our QDII business is getting better and that can be a cash cow to support our initiatives in China,” Chong noted.
Barings distributes QDII funds through HSBC, ANZ, Citi and Standard Chartered Bank on the mainland by targeting affluent retail investors.
While the priority is North Asia, Barings is also weighing up options for its Southeast Asian business. Currently, it has no physical office in Singapore. The market, which is important for its retail and private banking distribution, is covered by a senior sales person based in Taiwan. The unnamed sales person left the firm in July.
Barings is hiring a replacement, said Chong, but the firm hasn’t decided where the new person will be based.
Chong said the firm was looking at having a presence in Singapore but the priority at the moment was North Asia, in particular China. The firm has added a senior manager to the sales team to focus on the China market. Marco Chong started at Barings in Hong Kong yesterday as senior manager for sales, having previously worked in a similar capacity at China International Fund Management Company, JP Morgan Asset Management’s joint venture in China.