After 20 years of selling Asia investment strategies to American clients, Matthews Asia has made the leap across the Pacific and established a presence in Hong Kong.
The biggest Asia-dedicated specialist asset manager in the US obtained a type 1 broker-dealer licence from the territory’s Securities and Futures Commission this week, enabling it to sell funds to professional investors.
And the San Francisco-based firm, with $18.8 billion in AUM, is in the process of registering its funds for sale to the retail market in Hong Kong.
It has also gained regulatory approval to sell funds to professional investors and through private banks and insurance companies in Singapore.
The firm’s newly registered unit, Matthews Global Investors Hong Kong, will initially target private banks in both locations, but also plans to market to institutional investors further down the line.
All this has been planned for some time. Jonathan Schuman and James Campion were officially unveiled in October as head of global business development and Asia head of business development, respectively. And Matthews has had an office in Hong Kong's Two Pacific Place since September, housing Campion and his assistant.
“Over time, as the business builds up, we would look to hire more,” he says, “but this will be a satisfactory number for the foreseeable future.”
Matthews also set up a Luxembourg-domiciled Ucits umbrella fund last year to provide investors outside the US with access to its strategies. Matthews Asia Funds comprises four products: the Asia Dividend Fund, launched on April 30, 2010; Pacific Tiger Fund (its flagship Asia ex-Japan fund), also launched on April 30; the China Fund, launched on February 26, 2010; and the India Fund, which will become available on June 30.
The products employ the same strategies as Matthews’ US-based portfolios of the same name and are managed by the same team. All investment decision-making and portfolio management will still take place in San Francisco. The firm has a total of 12 strategies – all Asia-focused and long-only; some regional, some single-country.
The investment team carried out more than 700 company meetings on-the-ground in Asia in the first quarter of this year, stresses San Francisco-based Schuman.
The firm does not impose particular capacity limits on any of its funds, although “capacity is something we take very seriously”, he adds. “We think investors will benefit from the products getting to scale.”
So how will Matthews distinguish itself in an increasingly fierce marketplace, particularly given its status as a relatively unknown brand in Asia?
“We have always had a distinct approach to investing in Asia that we think will be well received,” says Schuman. “Not just because it’s the home for Asian investors, but because we are a well established, active, non-benchmarking style manager. That makes us different from many of our peers in the Asian equity space.”
The Ucits funds cumulatively have over $100 million in AUM and Matthews has just begun marketing to support them, says Schuman. Most of the investment so far has come from Europe into the Asia Dividend Fund. There has also been interest in the products from distributors and investors in Latin America as well as Asia.
Before joining the firm, Schuman was a managing director at PineBridge Investments (formerly AIG Investments) in Tokyo, responsible for institutional sales and marketing for AIG’s third-party investment-management business in Japan. He spent more than a decade in Japan with the group before leaving in July last year.
Campion was most recently head of Asia distribution at UK asset manager Threadneedle, but left the firm in February last year. He has worked in the Asia-Pacific region for nearly 20 years, for firms including Allianz Global Investors, New Star Asset Management and Schroder Investment Management.