PricewaterhouseCoopers has completed a global investment management survey that finds relatively few fund management companies pursuing acquisitions in Asia. About 30% of houses surveyed in Asia indicated they were likely to make acquisitions. That is rather low by global standards: 50% of European respondents and nearly 85% of North American respondents are bent on growth via acquisition.

PwC interviewed the CEOs or CFOs of 71 global fund management companies with a combined asset size of $6.6 trillion. Roughly a third of these firms had AUM of more than $50 billion, and another third had AUM of $10-50 billion. Of the 71, 27 came from Asia, comprising of Australia, Hong Kong, Japan and Singapore.

Robert Grome, partner in PwC's Hong Kong investment management industry group, says many global firms found it easier to acquire businesses in Europe. "Headquarters thinks it can make more money in Europe," he says. He notes the operating environment in the major Asian countries is difficult. "People remember all the difficult times in Japan," he adds, referring to a string of M&A disasters in that market throughout the 1980s and 1990s.

If acquisitions are only for the bold in Asia, joint ventures are on the rise. Half of both Asian and European respondents said they are pursuing joint venture opportunities, versus a bit over 30% of North American peers. The rapid growth of fund management JVs in China has fuelled the growth in Asia.

Among the survey's other findings is an emphasis on risk management and compliance. Globally, respondents prioritised these above other tasks, such as distribution, platform design, tax issues and so on. Yet these were the areas that fund houses reported the least degree of readiness - particularly in Asia.

"More than 85% of respondents in Asia consider risk management as a top priority, yet only 38% said they were fully prepared," said the PwC report. Asian firms have particularly lagged in terms of controls reporting, compliance and adherence to global standards of performance measurement.

Gromes suggests this is because the Asian financial crisis placed such cost-cutting pressures on fund houses that they lost their discretionary spending capacity. Only now are firms becoming sufficiently profitable to start investing in the necessary systems. He also points out that Asian firms lag far behind the US or UK in terms of getting independent accountants or auditors to confirm to clients that their internal controls meet international standards.

Grome also said that respondents from Australia differed markedly from Japanese or Asian respondents. "Australia's industry is very mature and fully meets US standards," he says.

That suggests removing the Australian skew from the 'Asian' results would put global fund houses operating in Asia proper and Japan even further behind the curve.