MAS names sustainability head; Malaysia’s EPF appoints COO and CFO; GIC PE head for SEA leaves; State Super hires new exec; Hesta appoints chief growth officer, chief Debby Blakey appointed to corporate governance board; ex-BlackRock exec joins IQ-EQ in Singapore; HSBC AM builds direct real estate team; ex-Vanguard head of distribution joins LGIM; Sanne names Singapore head; and more
Over the last two years, Manulife Asset Management (Thailand), headed by CEO Alan Kam, has accumulated around Bt5 billion ($160 million) in assets under management. ThatÆs something Kam is proud of, considering he has a staff of 18 when most firms in the industry have at least 50. Kam joined Manulife in January 2006 and set up its Thai operations. Previously, he was CEO of Aberdeen Asset Management in Thailand. In total he has over 27 years experience in the financial service industry, including posts in New York, London, and Los Angeles.
Kam spoke to AsianInvestor about ThailandÆs mutual funds industry and ManulifeÆs business strategy in that market.
How do you compete with other fund management companies in Thailand?
Kam: My target is high-net-worth individuals and institutional clients. The fact that we are not a bank-owned asset management company and that we are not allowed to use insurance agents to sell our funds, we rely heavily on foreign banks for distribution.
My distribution channels are hybrid banks such as Citibank, Standard Chartered Bank, and Deutsche Bank. And since their client base is the more high-net-worth and institutional level, thatÆs also our natural base. At the moment 70% of our AUM comes from the bank channels and 30% from our direct sales force.
What is the mix of your AUM?
In terms of sourcing, Bt2.5 billion ($80 million) is from Manulife Insurance and managed in private funds. The other Bt2.5 billion ($80 million) is public money.
In terms of where the money is invested, Bt1.5 billion ($48 million) is invested overseas and the rest is in the domestic market. In terms of assets, Bt1.4 billion baht ($44.8 million) is in fixed income and the rest in equities.
What is your plan for the business?
To build a product suite, which will take about two to three years. The right product is important, timing is important, and building our track record is important. Improving our operation platform û IT, customer relationship management, and fund accounting û is also on my list of priorities.
What is your product range at the moment?
We have six funds: one fixed income fund and five equity funds, which includes three local funds and two foreign investment funds (FIFs).
What are the growth opportunities that you see for your business?
If you look at the penetration rate of the fund industry in the US, for every US dollar that is saved, there is more than one US dollar in the fund management industry. In Thailand, for every baht in savings accounts, there is 30 centavos in funds. From there, you can see the potential for growth.
One major development is the gradual easing of deposit insurance. That will push more money into funds. [After the Asian financial crisis in 1997, which was triggered by the collapse of the Thai baht, Thailand implemented a blanket guarantee on baht-denominated deposits with local and foreign banks. Under the new Act, the full amount of deposits will be protected in the first year of enforcement, Bt100 million ($3.2 million) in the second year, Bt50 million ($1.60 million) in the third year, Bt10 million ($320,000) in the fourth year, and only Bt1 million ($32,000) from the fifth year onwards.]
Having said that, the market capitalisation of the Thai stock market is only $209 billion and the total assets of mutual funds in our system is around $44 billion. ThereÆs not much room for local equities funds to manoeuvre.
How are you addressing the challenge presented by ThailandÆs relatively small stock market?
By looking at the fixed income market, which is huge, and real estate investment trusts (Reits). I would like to bring in a third-party Reit that invests overseas. Two of my FIFs are non-Manulife funds, they are China Value by Value Partners in Hong Kong and Emerging Eastern Europe by Charlamagne Capital.
I deal with highly sophisticated investors and I need to offer them products that will add value to their portfolios.
In three weeks time and in June, I plan to launch two new FIFs, and then in July I plan to launch another local equities fund. [Kam declined to give more details, pending regulatory approval.]
For an in-depth look at Thailand's fund management industry, see the May 2008 edition of AsianInvestor magazine.
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.
Insto roundup: GPIF staff say J-Reits more attractive than traditional assets; Hong Kong's strict Spac criteria
EISS Super hit by another scandal; China's CSRC launches consultation on disclosure requirements for new BSE securities; Hong Kong issues consultation paper on Spacs; New World Development partners with China Taiping to focus on Greater Bay Area projects; GPIF employees say Japanese Reits have grown more attractive; Taiwan's BLF invites bid for $1.7 billion mandate; and more
SGX’s new framework for Spacs will likely provide investors with a much-needed channel for direct deals, but the verdict is still out on whether it will bring liquidity to the bourse.