Asia’s cashed-up investor base has created significant capital flows into Europe, where their appetite for Ucits funds is spurring the creation of products aimed at Asian investors, according to Jonathan Willis, BNY Mellon Asset Servicing's head of transfer agency for Asia-Pacific and Europe, Middle East and Africa.
“European fund managers who used to see a lot of inflows from domestic sources are seeing those inflows slowing quite dramatically, but they’re starting to see significant inflows from Asia and Latin America," says Willis.
Asian fund houses – particularly those in Taiwan and Korea – have taken notice of capital outflows from the region into Europe, and as a result are planning to create Luxembourg-domiciled Ucits funds.
“They would be able to capture some of the money flowing out from the region, and also capture some of the money coming in from European investors who want to buy expertise from the region,” says Willis.
“Inflows into Ucits funds from the Asian market have been going through the roof. The brand seems to be very in favour with the Asian market, as there’s a sense that it delivers a level of security,” he notes, adding that investors in the region are investing in Ucits funds by both Asian and European fund managers.
On the servicing side, Asian fund managers are outsourcing in greater numbers as the regional industry grows in scale and sophistication. The Asian outsourcing market will continue to mature over the next few years, predicts Willis, with back-office and value-added functions being in popular demand, with middle-office functions “following shortly, if not at the same time”.