ATR KimEng Financial Corporation has established a dedicated asset management business in the Philippines and recruited Michael Ferrer, former manager for Southeast Asia business development at ING Investment Management, to run it.
The asset management industry in the Philippines is a modest $20 billion, of which around 90% is in the form of banks' trust divisions, and the remaining $2 billion in mutual funds. Moreover, nearly all of this is invested in domestic fixed income.
The market registered a small net inflow in 2008, and continues to grow this year. That's one reason why ATR KimEng wants to upgrade its asset management business.
The bigger reason is that this market is not well served, given the predominance of domestic bond products.
"There are no ETFs, no Reits, and little access to offshore products," says Ferrer. All of these are products the firm wants to bring to Filipinos. Over time it would like to build a range of asset classes big enough to allow it to then provide multi-manager investment services.
In the short run, the firm also sees a chance to become a leader in equity investment products, says Manuel Tordesillas, president and CEO of the ATR KimEng Group.
Tordesillas hopes to use the firm's relationships overseas to market Philippine-oriented products to investors elsewhere. One parent, KimEng, is a Singapore-based brokerage. It in turn is owned by Japan's Mitsubishi UFJ Securities. Tordesillas notes there is a precedent for selling Philippine equity products to Japan, via smaller brokers.
Locally, the firm hopes its independence means it can convince the big banks to put its products on their shelves. Open architecture is rare in the Philippines, as the banks tend to only support proprietary trust or fund products. ATR KimEng's goal is to have enough unique product, without appearing like a competitor, to get banks interested.
Tordesillas notes that beyond the biggest names (such as Bank of the Philippine Islands or Metrobank) there is a second tier of smaller banks that may be keen to promote unique investment products. Moreover, mindsets are changing. "Banks need to offer more choice," he says.
ATR KimEng is a big player in the local equities broking business and is independent of the commercial banking groups. A unit called ATR KimEng Direct Investments will be renamed ATR KimEng Asset Management Holdings.
Another unit, ATR KimEng Capital, owns a subsidiary called The Mutual Fund Management Company of the Philippines (MFMCP), which currently manages three funds and a trust business.
These are to be combined under the asset management holding unit, and represent Ps5 billion of assets under management. The MFMCP arm will be rebranded as ATR KimEng Asset Advisors, and the firm intends to build a team to support its sales and investment capabilities.
The firm also has businesses in insurance and property development.