Mercer Investment Consulting is bringing its retail ratings and web platform, MercerFundWatch.com, to Hong Kong after operating it for two years in Singapore. The service will be available starting in April and is aimed to give funds distributors and financial advisors a tool for the retail and retirement market.
The consultancy launched its retail funds ratings and the web-based platform in Singapore as an acknowledgement that, globally, retirement schemes are increasingly shifting to defined contribution, even in national social security systems. Singapore's CPF members have long been able to invest part of their savings into authorized unit trusts, but face such a bewildering supermarket that they or their advisors need tools to filter appropriate funds. "IFAs aren't scaled to do the necessary research," says Richard Nuzum, managing director in Singapore.
Mercer believes that its institutional consulting capability allows it to base its ratings and recommendations on 'forward-looking' and qualitative judgments, rather than simply looking at past performance, which it says incumbents such as Morningstar or Standard & Poor's rely on. Moreover, Mercer doesn't require a track record when it looks at retail funds so it can provide ratings on new ones as well. "We include information about understanding a fund's characteristics and its behaviour in different economic conditions," Nuzum says.
With Hong Kong's ORSO schemes increasingly adopting defined contribution, as well as the increase in MPF preserved accounts and a new focus on multi-manager schemes providing MPF members with more choice, now seems like a good time to introduce this service to the Fragrant Harbour. If the launch is a success, Mercer wants to roll the site out to Taiwan, Korea and Malaysia by the end of this year.
The service covers all collective investment schemes, including guaranteed funds and variable annuities.
Michael Lim runs this project in Singapore but the firm is now searching for someone to spearhead it in Hong Kong, to ensure a wall between the consultants and the funds rating staff.
Mercer also hopes to get banks - the dominant channel for mutual funds in Hong Kong and Singapore - to use the service. He says one of Singapore's big-three banks already relies on MercerFundWatch as a screen before recommending funds to customers. The site also offers fund managers a facility to provide information about their organization and products in a standardized format, allowing investors to make orange-to-orange comparisons.
The business is financed by charging fund managers for ratings, although Nuzum adds Mercer doesn't publish negative ones.
Meanwhile, Nuzum will be leaving Asia after 11 years in Tokyo and Singapore. He is heading to New York to take over the firm's investment consulting practice in America. No new appointments will be made. Garry Hawker has already been covering Southeast Asia and will now be responsible for investment consulting regionally, and he reports to global head Tim Gardner in London. Alan Flynn arrived in Hong Kong last year and covers North Asia, and reports to Hawker. Investment consulting in Japan will continue to be run by Tatsuo Mizutori.