More Asian investors have been looking to Europe, the search for yield has waned and demand has grown for multi-asset strategies over the past couple of years, said Colin Tipping, investment proposition director of UK insurer Friends Life*.
The group was last week reported to have hired Goldman Sachs to help it sell its international business, Friends Provident International (FPI), though no formal decision has been made, according to the sources quoted.
FPI, which has offices in Hong Kong and Singapore, was hit hard in the first six months of this year by challenging market conditions and regulatory changes, it said in its financial report. Value of new business fell 44% year-on-year, and the firm expects more of the same in the second half.
But that isn’t stopping it from moving ahead with a buildout plan in Asia, which includes devolving more accountability and responsibility to its offices there, in light of its growing focus on the region.
FPI's fund selection is currently done out of the UK.
“If you are doing performance attribution on a fund, it doesn’t really matter whether you in the UK, Hong Kong or wherever. The numbers are the numbers,” London-based Tipping told AsianInvestor. “But understanding the dynamics of the local market is really important; that’s why we are building out teams in the regions.”
The firm didn't give more details on the plan.
Tipping also discussed what he sees in terms of demand in the region.
Asia’s wealthy often look for the next theme, while expats tend to take a longer-term approach, Tipping said. “[The latter] look for multi-asset, diverse strategies, whether in a single product or through an adviser putting together a portfolio of individual building blocks.”
In the past couple of years FPI has seen interest in multi-asset income strategies rise as flow into high-yield strategies has been slowing.
Moreover, Asian investors are increasingly looking to Europe, both from an income and growth perspective, he added.
Following the financial crisis, FPI has been responding to rising demand for big global fund managers, which have scale and a wide range of strategies.
But the firm still likes specialist players. “Where we look at thematic or tactical plays, we often go with more boutique-type players,” Tipping said. You’ll have houses with specific expertise – it might be as basic as UK small-cap or emerging-market debt.”
Friends Life Group had £118 billion ($196 billion) in assets under administration as of last month.
* For a full interview with Colin Tipping on how FPI picks the managers and products it puts on its shelves, see the forthcoming (September) of AsianInvestor magazine.