US-based Invesco, which manages $580 billion of assets globally, intends to grow its retail asset base in Southeast Asia, says Singapore managing director Piau Lim.
The firm will increase activity in the private-banking and mass-affluent segments. "The Monetary Authority of Singapore has done a great job selling Singapore as the Switzerland of the East, as a wealth-management hub," Lim says, citing the fast-growing number of firms vying for a piece of the action in the Lion City.
The five-strong Invesco team in Singapore moved into a new office in late January and has largely been servicing institutional clients, although it does have some relationships with large global distributors, focusing on mass-affluent and high-net-worth clients.
Lim would not be drawn on any other distribution agreements it is looking at, nor at what criteria it has set for the firms it is looking to partner with. He would only say that the firm is trying to do "more with select quality relationships and less people".
"We want to have a greater share of the wallet with existing relationships," he adds, suggesting that Invesco will concentrate on getting more of its products on the shelves of its existing distributors.
The approach may also reflect the increased difficulty of getting onto distributors' shelves these days, due to a broad move by many to reduce the number of fund managers they work with, or at least look more carefully at the product range they are selling.
However, Lim says this is not the case. "Competition is always there. With all the problems the mutual-fund business has been through, there's been greater scrutiny in terms of what distributors will do to include and exclude managers," he adds. "But that is quite independent from our decision of wanting to be selective."
Meanwhile, Invesco's June 1 acquisition of Morgan Stanley's retail asset-management business, including Van Kampen Investments, will allow Invesco to offer more products and strategies. "The acquisition means we've added new product capabilities to our arsenal," says Lim, "and that can only ultimately benefit our clients in Asia."
In the pensions space, Invesco does not have any funds being sold through Singapore's Central Provident Fund (CPF) retirement-savings scheme, nor does it plan to in the immediate future. "Our clients primarily include sovereign wealth funds, central banks, pension funds, insurance companies and other financial institutions," says Lim, "and with the finite resources we have, we would like to be more focused [on them]."
Hence, any moves into the CPF market are unlikely for at least a year, says Lim, adding that this is an area that has been put aside by the firm for the time being. The fact that the criteria for getting funds approved by the CPF board are now stricter than in years past may have contributed to this view, although Lim declines to comment.
Moreover, it seems the retail market may offer third-party fund managers more opportunities for asset growth than, for example, government organisations. "In the past couple of years, we've seen large owners of Southeast Asian 'patient capital' -- my way of describing sovereign wealth funds -- pretty determined to in-source their investment-management functions," says Lim.
Moreover, central banks in Southeast Asia are looking to further diversify beyond G3 sovereign fixed-income securities, he adds. "Some have already done so, and some are looking at how they can do so," says Lim. "It's definitely a broad trend."
There's also been "a bit of a reality check" among Southeast Asian institutions with longer-term liabilities, such as pension funds, which have realised that a one-year endowment model -- in particular, David Swensen's Yale model -- may not be a suitable approach for them, says Lim.
The Yale model seeks to exploit the 'illiquidity premium', but these organisations with liabilities can't be as illiquid as the Yale endowment, he explains. So they're going back to basics -- that is, into assets such as bonds and publicly traded markets -- and reducing their exposure to, for example, private equity.