Goldman Sachs Asset Management has entered the increasingly crowded retail market in Asia by registering 13 funds in Singapore, having spent the past 18 months working to build its private bank distribution business.
But the US firm is later to the retail game than many of its international peers, a business in which high marketing spend is key for building brand awareness, note industry observers.
GSAM will launch the 13 funds – which have been approved by the Monetary Authority of Singapore – to retail investors in the first quarter of this year. They will cover equities (global, Europe, emerging markets, Asia), high-yield bond (Europe, Asia, growth corporate bond) and multi-asset (global income, real estate balanced).
GSAM joins a string of international asset managers making similar moves in Singapore with a view to using the city state as a hub to access other Southeast Asian markets, potentially via the Asean passport scheme. Other firms building out regional retail businesses include Neuberger Berman, JP Morgan Asset Management, Capital International, T. Rowe Price and Axa Investment Managers. They have all added to their teams to this end in the past couple of years and/or moved to register funds locally.
There has been a convergence between private bank and retail fund distribution, said one industry executive, who asked to remain anonymous. “A lot of the retail players started off in private banking distribution,” he noted. “If you’re successful in private banking, you will look at retailing some of the products.”
Retail business, however, requires a bigger marketing spend. Distribution partners will expect the firm to be visible in the market place and the strength of the brand to resonate with retail investors.
“Many people have launched retail funds, but whether they do get pick-up is a different dynamic,” said the unnamed executive.
Most distributors now prefer to retain a smaller list of products than in the past and concentrate on a focus list. So getting picked comes down to factors such as brand visibility, appropriateness of the fund (whether it supports house views and fills a gap) and whether distributors are prepared to spend time putting in place another agreement.
Given tighter rules around product and investor suitability these days, fund selection is now more time-consuming. Besides, the trend is now towards greater regionalisation and rationalisation of partnerships.
GSAM declined to comment whether it would enter the retail market in Hong Kong or on hiring plans.
The firm also declined to say who would run the Singapore business, though ultimately the team there reports to Jessica Jones, Hong Kong-based head of third-party distribution for Asia ex-Japan. She took on the role – at the time a newly created one – and relocated in 2014 to Hong Kong from Australia, where she had also spent years building the private banking business, as reported.
There is a total of 200 GSAM staff in Singapore, GSAM's regional hub, but the firm declined to break down that number further.