Canada's BMO Global Asset Management plans to set up an investment team in Hong Kong for locally domiciled products, with a view to selling them into China once the proposed mutual recognition agreement is in place. It also aims to strengthen its distribution capabilities in Asia.
This will add to the $130 billion firm's asset management presence in the city through Lloyd George Management, a $2.5 billion shop it acquired in 2011 specialising in frontier and emerging markets.
The first products launched in Hong Kong will be exchange-traded funds, which BMO hopes to list in the first half of 2014, says Amit Prakash, head of wealth management products for Asia.
The ETF range will invest across a variety of asset classes in the region, says Prakash, who joined BMO from BlackRock last year. The ETFs will have broad exposure initially, but the firm may eventually introduce ETFs invested in a narrower range of sub-asset classes and sectors, he adds, declining to provide more detail.
BMO has 60 ETFs listed on the Toronto Stock Exchange worth $11.5 billion, second only to BlackRock’s iShares in the country in terms of assets.
The firm also aims to expand its distribution capabilities in Asia, and will be adding executives to its sales team in upcoming months in Hong Kong. BMO is particularly keen to meet with institutional investors such as sovereign wealth funds and endowments, as well as private banks, in China, Korea and Australia.
In June, it hired a distribution team in Melbourne, which markets the full product range, including mutual funds and ETFs, to Australia’s superannuation industry.
Meanwhile, BMO Global AM is looking to sell strategies to Chinese insurance companies. There is a noted uptick in interest among mainland insurers to increase overseas investment following a move late last year by the Chinese insurance regulator to relax foreign investment rules.
BMO has been busy on the acquistion front in the past few years. In addition to the Lloyd George acquistion in 2011, it bought a 28% equity interest in Shanghai-based Fullgoal Fund Management in 2003, and more recently, in 2012, took a 19.99% stake in Cofco Trust, part of China's Cofco Group.
Yet the firm is does not have any more acquisitions on the horizon, says the firm’s Chicago-based CEO, Barry McInerney, noting BMO will instead focus on growing organically.
"We are pretty pleased with organic growth here in the region,” he says. “We’ve got local manufacturing capabilities for Asia and emerging frontier capabilities, and we have a growing team under Amit’s leadership.”
The firm also has investment and distribution teams in Chicago, London and Toronto, giving the firm adequate global reach, McInerney adds.