Manulife Asset Management is seeking to build out its asset allocation team in Asia based on expectations of the great rotation amid the low interest-rate environment combined with the region’s aging demographics.
The firm, which manages more than $100 billion in asset allocation strategies out of its $248 billion global AUM, introduced a dedicated two-strong Asian team in Hong Kong last year, and anticipates hiring more professionals this quarter.
“We think the asset allocation team will be a significant source of growth in our Asia-invested assets,” Michael Dommermuth, president of Manulife Asset Management Asia, tells AsianInvestor. “As a consequence we will be further investing in that team and looking to hire in the next quarter. That is one of our most important strategic processes as we go forward.”
The team focuses on providing an array of asset allocation products, which initially has meant lifestyle funds blending domestic and international equity and fixed income.
Following a surge in bond issuance across Asian markets in the past few years, Dommermuth notes: “Now we are starting to see tentative signs of movement away from fixed income, embracing a return to equities to some extent.”
Having spent time examining household income for the elderly across Asia, Manulife has concluded they are under increasing stress due to a number of factors including a decline in familial support.
“The aging story is not limited to Japan or North Asia,” Dommermuth argues. “It embraces Asean [Association of Southeast Asian Nations] as well. [The elderly] are experiencing a lack of income security at the point of retirement.
“Our view is these assets need to be more efficiently deployed and asset allocation is going to be a key component, not just through the production of stable income sources, but multi-asset and by creating inflation protection.”
Overall, Manulife operates in three core areas: funds, pensions and insurance. It owns nine asset management companies and has over 50 fixed income and 90 equity investment professionals located across 10 markets in Asia-Pacific.
Manulife introduced its flagship Asia fixed income fund to the US in the fourth quarter of last year, and Dommermuth anticipates it will export the strategy to other international markets.
He notes, too, that two of the primary areas the firm has identified for growth globally are its Asia division and wealth/asset management. “We sit at the juxtaposition of the two,” he reflects, adding that Asia now accounts for 30% of Manulife’s global core profitability.
Manulife scored well in AsianInvestor’s recent research effort to identify the most heavily invested fund firms in Asia Pacific. By percentage of assets, it is the fourth most invested in Asia (ex-Australia and ex-Japan) at 19.4% of its global investments. See the June 2013 edition of AsianInvestor magazine for full details.