US fund house MFS Investment Management aims to strengthen its research teams and build its client base in Asia Pacific, with a focus on institutional and wholesale business.
While the firm has plans to open an office in Korea at some point, as discussed with AsianInvestor two years ago, it will prioritise adding staff in its existing offices in Hong Kong, Singapore, Sydney and Tokyo.
“If look around the globe, I can say our Asian and Latin American research teams will grow faster than our European or US teams,” said Rob Manning, MFS's global CEO and chairman. “I am a big believer in emerging markets, and we will be adding in those regions.”
MFS has about $430 billion in assets under management, of which around $50 billion is managed for clients in Asia Pacific. Australia and New Zealand account for about half of its regional AUM, with Asia ex-Japan representing 20% and Japan the remainder.
Overall MFS has about 70 staff in the region, including six portfolio managers, 11 analysts and five research associates. Its analysts operate within eight sector teams globally, with PMs assembling best ideas off of this research platform.
Globally its business is about 50:50 institutional and retail, although in Asia the split is weighted up to 90% in favour of institutions. Outside of the US its focus is on institutional and sub-advisory business, although it does have Sicav-registered mutual fund product listed in Luxembourg.
MFS's single biggest strategy is its global equity fund, which it hard-closed last October at $60 billion, of which Asian clients represent about 10%.
The firm in particular is targeting sovereign wealth funds and insurers' general account assets, while also seeking to get its product on distributor platforms.
“As long as the wealth continues to accrue [in Asia] and the middle class advances, the demand for product is going to be greater in Asia than Europe and even the US,” noted Manning.
But MFS has no plans to launch locally domiciled funds for pending passporting initiatives such as the Hong Kong-China or Asean schemes, said Jonathan Tiu, who was named Singapore CEO last November. “That is not our focus."
“The passport will benefit local institutions more than international managers like us, since we have our funds listed in Luxembourg," added Tiu. "I know they [Europe-listed products] will probably lose favour versus locally registered product over the long run, but nevertheless that has been our mode of operation. We do not manufacture locally.”
While he does not rule out going after retail clients directly in the future, MFS's immediate focus is on capturing retail business through distribution partners and sub-advisory. “That is the most efficient way of looking at it, capturing growth through our partners rather than doing it ourselves," said Tiu.
He sees better opportunities to deepen relationships with sovereign wealth funds, pension funds and insurers in Asia and the Middle East.
Asked if MFS had picked up any mandates from Chinese insurers, where rules have been relaxed to allow them to invest more widely overseas, Tiu said “not yet” but he sees it as an area rich in potential.
The firm received a new capital markets licence from the Monetary Authority of Singapore in November, with its new entity officially starting operations in April.
That freed MFS to expand its international investor base. Until it had received its licence, the firm had been restricted to managing money for no more than 30 accredited and institutional investors. The number is unlimited for companies with a full fund management licence.