When an institutional client with $175 billion in assets under management makes a suggestion, fund houses tend to listen.
So it has proved in Malaysia, where asset managers are looking to expand their investment teams at the behest of the state-backed Employees Provident Fund (EPF), the country’s biggest investor by far.
Sources say that last year EPF held one-on-one meetings with foreign fund managers to encourage them to locate investment and operational teams in Malaysia. The fund urges them not to poach from rival firms in Kuala Lumpur, but rather hire and train young graduates to strengthen the local industry organically.
EPF is not only seeking to boost the domestic funds industry, but is also expanding and increasing the quality of its in-house staff, across compliance, risk management, investment and so on, say asset managers.
“We do encourage fund managers to have a strong team in Malaysia so that they can provide better returns,” confirms an EPF spokesman. The fund is also building its in-house investment team, which is now close to 200-strong, he tells AsianInvestor, without giving further details.
Firms get “brownie points” for strengthening their on-the-ground presence, says one senior fund executive. And as the largest single Malaysian client for asset managers, EPF has a great deal of clout, particularly as a government institution, he adds.
“I agree with the approach of hiring young staff; it can be annoying and frustrating for investors to see people continually moving on,” says another executive. “It’s good that they’re encouraging new blood.”
The Malaysian authorities in general want to see the domestic asset management industry grow stronger and more diverse in its capabilities by building up its regional and international offering. Hence they are encouraging fund managers to build their capacity beyond domestic assets.
Many firms are indeed building up their teams in Kuala Lumpur. For example, BNP Paribas Investment Partners has not only consolidated its global sukuk division there, but last year also put its growing Asean equities team in Malaysia. Singapore would be a more common base for such capabilities among international fund houses.
Angelia Chin-Sharpe returned from her post as senior director of Asia institutional sales in Singapore at BNPP IP to take up the role of Malaysia CEO and build the team. There are now 14 executives in the office, including six investment staff, with one more position currently being filled.
BNPP IP previously ran sukuk assets out of London, Malaysia and Singapore, but now it does so entirely out of Kuala Lumpur.
Meanwhile, Franklin Templeton Malaysia added a young member of staff, an equity research associate, around three months back, and Nomura Asset Management is busy building up; it is seeking to add in fixed income.
In fact, asset managers across the board in Kuala Lumpur are seeking fixed income staff in particular, say fund executives.
Such moves are in line with the government’s call for greater capacity building and human capital development as part of its effort to transform Malaysia into a high-income nation by 2020.