The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
The move comes amid a number of strategic changes Fidelity is enacting in Asia, including the hire of Stuart Guinness from Prudential Asset Management to lead product development. ôOther firms are freezing new hires but we donÆt need to,ö Fidelity says. ôWeÆre expanding and using this opportunity to hire.ö
Ryan had previously established one of the best-regarded Sino-foreign JVs in mutual funds as regional CEO at ING Investment Management. China Merchants Fund Management was founded in the first wave of fund JVs in 2003. He joined Fidelity in January 2008 in a new management role, reporting to Asia-Pacific CEO Brett Goodin.
Fidelity Investments had steadfastly refused to enter into such a deal. The privately owned company stuck to a policy of avoiding situations in which it lacked control. For several years, this policy looked wise, as a sagging A-share market and structural problems in local capital markets made the whole business a money-bleeding headache.
But the firm has also missed out on the funds industryÆs tremendous growth in 2006 and 2007. Assets under management among foreign-invested fund houses in China rose from about $100 billion, a little more than 20% of the domestic funds market, to around $450 billion, or 40% of the domestic market, by the end of 2007.
Fidelity has maintained a rep office in Shanghai for three years, led by Anne Lam, which has pursued international institutional business and QDII opportunities.
ôWe are reviewing the whole effort and stepping up our efforts in China,ö Ryan says. ôWeÆve had a rep office but the way we approach the market has to change. The rep office is still important but weÆre looking at our whole team objectively, based on what we want to do now. We are looking for ways to enter the market.ö
He says the possibility of doing a joint venture is ôunder investigationö.
Zhan Long will start his new role on July 1, moving from Shenzhen to Hong Kong. He was previously executive deputy general manager at China Merchants Fund Management, which he joined when it was founded. Fidelity plans additional hires to support his effort, which could include investment or research capabilities; the firm has submitted a QFII application already.
ôWeÆre looking at all options,ö Ryan says, noting that ZhanÆs task is to put together a strategy.
This is only one of several areas where the firm is expanding or changing course. It has just hired Stuart Guinness from Pru in Singapore to lead product development. The current team is being restructured to go after opportunities in private banking, direct sales to high-net-worth individuals, and institutions, as well as to offer more innovative products to FidelityÆs existing core clientele, the wholesale market.
ôWe have to sharpen our focus on product development beyond the things weÆre already good at,ö Ryan says. ôWe have to be more innovative and improve our time to market.ö This includes other types of asset classes for institutions or wholesale investors, not just equities, which is the firmÆs traditional strength, but asset-allocation mandates or real estate products.
One example û not cited by Ryan û is the Korean funds market, where Fidelity was by far the dominant provider of offshore products from its line of Sicav funds domiciled in Europe. The Korean authorities changed tax rules to favour locally domiciled, international products. Suddenly new sales evaporated and Fidelity had to scramble to keep up with other players that also had onshore funds. Taiwan is reportedly considering similar tax changes.
When asked about this example, Ryan says the firm agrees it needs to expand its product line beyond Sicavs (he wouldnÆt comment directly on the Korea episode).
Madeline Ho, managing director in Singapore, has been given an expanded role. Fidelity has mainly concentrated on its wholesale business in Southeast Asia but now wants to go after institutional investors as well. She has just hired Quah Chum-Yong from DBS Asset Management, where he had been director and head of client services. His focus will be on sales and marketing to private banks and Southeast Asian institutions.
And Evan Hale, who previously ran the Korea business and moved to Hong Kong last year as its new country head, will also take charge of a regional effort to win business among private banks and establish a direct sales effort for high-net-worth individuals. The firm has a modest capability already in Taiwan and Hong Kong, but has seen other fund managers expand aggressively in these areas.
ôIn the past few years, FidelityÆs focus has been on its strong wholesale business,ö Ryan explains. ôWe had to cope with enormous growth. But we also realised the need to diversify û from being too focused on equities, too focused on wholesale, and into China and to the institutional business in Southeast Asia.ö
The firm intends to announce several more senior hires in the coming weeks, including one for product development aimed at insurance companies.
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
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