Having built a retail business in Singapore over the past three years, JP Morgan Asset Management is now looking to extend its mutual fund offering across other markets in Southeast Asia.
The firm now has over 40 distribution partnerships in the Lion City across banks, insurers and IFAs, noted Steven Billiet, who was named Singapore chief executive in February to succeed Andrew Creber. It still has some work to do to catch up with the leading retail players in the city-state, but its market share is growing fast.
JP Morgan AM is also exploring options for other markets, such as Indonesia. There, feeder fund structures do not exist as they do in some of the other Asean markets, and there is still a 15% cap on overseas investing by local managers.
The firm says it is keeping all options open, including setting up a new business and applying for a licence, buying a licenced entity or partnering with a local bank. “Don't expect any big news any time soon, but [Indonesia is] definitely on the radar,” Billiet told AsianInvestor.
Meanwhile, local investors in countries such as Malaysia, the Philippines and Thailand want more offshore investment exposure, and local asset managers want to partner with foreign players, he added. Providing such exposure via feeder funds, investment-linked products and sub-advisory is becoming a major source of revenue for international players, he said.
For example, several European equity funds have launched in Southeast Asia in recent months, and substantial net inflows reflect this. European equity mutual funds saw by far the biggest net inflows in the first quarter of any asset class in Singapore (S$435 million ($346 million)), with global equity income products next on the list with S$133 million, according to the Investment Management Association of Singapore.
And Billiet suggests there is more to come, as “the real economic recovery in Europe is still quite slow, and company earnings should continue to benefit from stronger economic growth. The upside potential is still there for Europe compared to other developed markets.”
On the alternatives side, JP Morgan AM is looking this year to launch multi-manager hedge strategies with daily liquidity. These could be popular, as some investors are currently quite reluctant to move into areas where it's hard to redeem their money quickly, noted Billiet.
Such liquidity requirements change how these portfolios have to be managed and may affect performance, he admitted. “Liquidity doesn't come for free – you might need to give up a bit of long-term performance for short-term liquidity.”