First it was the banks, now it is fund houses that are – or should be – worried about rising regulatory scrutiny.
As watchdogs increasingly turn their attention to the non-banking sector, they are likely to force asset managers to provide more and more data on their holdings and activities, said the chief executive of RBC Investor & Treasury Services.
This trend is driven by concerns over the transfer of financial risk and assets to the buy-side, Harry Samuel told AsianInvestor during a recent visit to Hong Kong.
Since capital-adequacy rules such as Basel III have made it difficult for banks to boost their bond holdings, managers can no longer rely on bank liquidity to support them to meet redemptions, he said.
“There is a lot of anxiety among some of the largest asset managers about how are they going to accommodate what ends up as systemic liquidity risk,” noted Samuel.
In a stress event, redemptions might not be covered by the liquidation of assets, or there could be a significant matching problem, he warned.
Asked about important trends he was seeing specific to Asia Pacific, Samuel cited moves by Australian asset managers looking to distribute outside of their domestic market.
When the firm set up on Australia in 2001, distribution was predominantly domestic, he said, but RBC I&TS has worked with some firms to boost distribution by launching Luxembourg and Ireland Ucits structures.
Samuel expects to see Australian managers with specialised products having the most success.
Investors want to pay lower fees for alpha, but they are willing to pay more for highly specialised ones with an infrastructure or real estate or PE focus, he said.
RBC I&TS had assets under administration of $3.25 trillion as of July 31. The firm does not break out the figure for Asia Pacific.