Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
S&P will however continue to offer its funds rating platform. It will buy back fund data from Morningstar for use in its global ratings system. A spokesman at the firm says the parent company, McGraw Hill, wanted to shed the ancillary collections business to allow it to focus on the ratings service.
S&PÆs offering to the funds industry includes ratings and research, indices, portfolio advisory services and investment research. It uses historical funds data as a screen for its fund rankings and research offering, but says the data isnÆt core to its business.
S&P says the sale wonÆt impact its staffing levels in Asia. Morningstar on the other hand acknowledges there will be overlap between its existing and acquired data businesses. ôIt is likely we will consolidate some offices over time,ö says a company spokesperson. MorningstarÆs largest office in the region is in Australia.
Despite this consolidation, however, the funds rating business in Asia has a new entrant: Trustnet, based in the United Kingdom, is opening an office in Hong Kong. TrustnetÆs prominent position in BritainÆs retail mutual-funds industry is based on its relationship with independent financial advisors (IFAs), which account for nearly 80% of fund sales.
In Asia, IFAs play a small role, accounting for no more than 10-15% in markets such as Hong Kong and Singapore, and less in other markets. But Trustnet has already signed up ING Financial Planning for Asia-Pacific business.
The companyÆs Analytics platform provides fund data and rankings based on factors including performance, alpha, beta and R-squared as well as information and Sharpe ratios.
Despite the small IFA market in Asia, Trustnet says there is still a business opportunity in the region. ôWe are already the main or sole provider of fund data to more than 70% of the UK funds management market,ö says James Jones, head of the companyÆs Asia-Pacific business. ôWe aim to help offshore fund management companies create new business opportunities as well as improve relationships with financial advisers.ö
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