Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
A series of new hires has expanded Macquarie FundsÆ Asian team to more than 40 in Hong Kong, Japan, Korea, Singapore, Malaysia and Taiwan. Globally, the fund house employs more than 750 people.
Macquarie Funds was set up in mid-2008 and became operational in August. The fund house serves as the asset management arm of the Macquarie Group and is the result of consolidating the portfolios and funds-based structured products businesses of MacquarieÆs internal funds management group (FMG), equity markets group (EMG) and Macquarie capital products (MCP). The business lines that make up Macquarie Funds have been present in Asia since 1996.
The fund house was created to provide clients with a single, integrated funds-product suite. It offers a range of products including managed funds across asset classes, funds-based structured products, hedge funds, funds of funds and responsible entity, and back-office services. As of end-September, it had assets under management of $53 billion worldwide, including $1.5 billion sourced from investors in Asia.
The fund house combined and reorganised a number of distribution teams globally, giving the majority of funds clients a single point of access to MacquarieÆs investment offerings. It doesnÆt include Macquarie GroupÆs specialist infrastructure and real estate funds operations.
Harry Krkalo joined Macquarie Funds on October 1 and assumed the newly created role of Asian head of retail distribution. He and his retail distribution team in the region target retail consumers and private banks, asset managers and other financial institutions operating in Asia.
Krkalo is now based in Singapore, but will be relocating to Hong Kong in January. He reports to Sydney-based Matthew Long, who was recently hired to build-out the retail distribution business globally.
Prior to his current role, Krkalo oversaw sales of non-flow structured products for the Macquarie securities group in Singapore. He has held similar positions with SG Securities in Hong Kong and Deutsche Bank in Australia.
ôIn our business, the bright spot will be Asia,ö says Krkalo. ôThatÆs the first place that we think will recover when things go back to normal and investors come back to the market.ö
Krkalo cites some figures that illustrate the potential for a strong recovery in Asia. He notes that Asia has registered around $140 billion in overall net inflows over the past 12 months, while Europe has suffered around $1 trillion in net outflows over the same period.
ôThe gap in the appetite for funds in Asia versus other parts of the world is markedly different,ö he says.
Asia has among the fastest growing economies in the world, and individual wealth is expected to continue to grow at an attractive pace û something that Macquarie Funds is counting on.
In a report issued by Merrill Lynch in late-September, after Lehman Brothers declared bankruptcy, the firm said the turmoil on Wall Street and its impact on financial markets and global economic growth will be a temporary setback for wealthy individuals in Asia-Pacific, but in the long-run a reallocation of assets will ensure that portfolio growth targets are on track.
Merrill Lynch has stood firm in the Capgemini Asia-Pacific 2008 wealth report projection û initially released in June û that assets of high-net-worth individuals in Asia-Pacific will grow at an annual rate of 7.9% to reach $13.9 trillion by 2012. Merrill Lynch noted that that a significant portion of the wealth accumulated by rich Asians comes from corporate profits and dividends, which are expected to survive the current market turmoil in relatively good shape.
ôInvestors are quite nervous amid the instability but what we really want to do is show that we have a strong commitment to Asia. Our plan is to roll out products in a systematic fashion, servicing our Asian clients. Hence, the resources that are now being deployed to Asia because of our strong belief that the region will rebound quickly,ö Krkalo says. ôAsset allocation movements in Asia tend to happen very fast. Investors in Asia tend to react quickly when opportunities come along and we want to be ready when that happens.ö
In line with the build up of its business in Asia, Macquarie Funds recently made several other high-profile appointments and movements in the region.
In Tokyo, Macquarie Funds hired Shigehiro Iwamoto from ABN Amro Asset Management to manage its retail sales effort and Francisco De Leon from UBS as a business analyst.
Wilfred Goh recently joined Macquarie Funds from the securities business to build out distribution through Singapore retail intermediaries.
Venke Rajendram has relocated to Kuala Lumpur from the Sydney office to seek asset management opportunities in Malaysia.
ôEach of the countries in Asia is an important distribution market for us. ItÆs just a matter of figuring out how to attack each market,ö says Krkalo. ôWhere we have licences, we will definitely have a dedicated head of retail distribution. Where we donÆt, we will have people more focused on finding partners to work with.ö
Meanwhile, Macquarie Funds has also decided to relocate a senior portfolio manager, Sam Le Cornu, to Hong Kong from Sydney in January. He is already spending a substantial amount of time in the region now. Others may also be relocated in the future.
ôTo service Asian clients better, we are bringing over the managers of funds that we have available in Asia,ö Krkalo says.
Macquarie FundsÆ specialist expertise lies in the management of infrastructure, real estate, commodities and resource related assets. It also has a track record in quantitative equities and a range of core and alternative fixed-income products.
The fund house previously launched a series of funds in Asia including the high-profile MQ IPO China Concentrated Core Fund, MQ IPO China Gateway Fund, MQ IPO China New Star Fund, and MQ Infrastructure Strategies Fund. The combined assets under management of these funds peaked at around $917 million in October 2007.
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