Nomura AM Taiwan eyes multi-asset push, tips pension deregulation

The firm's chairman told AsianInvestor about his plans to launch more multi-asset funds and exploit potential opportunities from pension deregulation and passporting schemes.
Nomura AM Taiwan eyes multi-asset push, tips pension deregulation

Nomura Asset Management Taiwan is on a drive to build out its business, according to the firm’s chairman, Ashwin Mehta. The firm is planning more multi-asset funds, looking to expand its master agent platform and eyeing potential opportunities from pensions deregulation and the expected growth of mutual recognition schemes in the region. 

Nomura AM Taiwan, or Nomura Securities Investment Trust Enterprise (Site), intends to launch a global multi-income product in June and possibly also a low-volatility multi-asset fund and an Asia-focused multi-asset fund in the fourth quarter. It launched its first multi-asset fund in Taiwan in May 2015, which had NT$3.3 billion ($101 million) in AUM as of February 26, according to Bloomberg.

This comes amid a drive in Taiwan to put out new multi-asset products this year in response to demand growth, and at the expense of a drop in retail investor demand for high-yield bond funds. Taiwan saw a net outflow of NT$139 billion from high-yield offshore bond funds last year, against a net flow of NT$125.5 billion into balanced funds, according to Taiwan’s Securities Investment Trust & Consulting Association.

Meanwhile, Nomura AM Taiwan – with $10 billion in AUM (70% retail and 30% institutional) – is also looking to attract more foreign firms to use its master agent platform. Offshore asset managers without their own Site must appoint a company to represent them in the offering and sale of their funds.

In addition to acting as master agent for NN Investment Partners' funds, Nomura Site will become master agent for Investec from April 1 and is awaiting regulatory approval to do the same for Dutch fund house Robeco. Nomura Site also sells offshore funds from Aberdeen, Janus, Pioneer and UBS. It used to be master agent for Aberdeen, AllianceBernstein, Janus and Pioneer, but these asset managers have since set up their own Sites.

Mehta also sees opportunities in Taiwan’s pension industry and the prospect of mutual market access between Taiwan and other Asian markets.

He noted that Taiwan’s pension industry was still at a nascent stage, with a mandatory contribution scheme first introduced, at least in part, in 2005. The retirement system is still centrally administered, with central authorities taking money in and investing on behalf of individuals. However, Mehta expects industry deregulation, in that individuals will be allowed to choose where to have their pensions allocated. which would be a huge growth area.

He is also optimistic about the possibilities of passporting schemes, in that they foster closer ties between markets and generate more opportunities. For mainland Chinese investors, Taiwan-domiciled funds are particularly attractive, he said, as the prospectuses are in Mandarin and the sales force speaks the language.

Mehta admitted that a China-Taiwan MRF may not happen any time soon, but said Taiwan was well equipped to take the opportunity when it arose.

Though very competitive, Taiwan is still one of the most attractive mutual fund markets in Asia, he argued. Its population is relatively wealthy, with a per-capita GDP of $22,355 in 2015, compared with $6,862 in China, plus it has a high savings rate of 34% as of end-2015.

However, the markets regulator, the Financial Services Commission, is taking a tougher regulatory line on foreign asset managers these days, with a view to helping the local funds industry to develop.

As of end-2015, Taiwan had 37 domestic asset managers running 672 mutual funds with a total of NT$2.2 trillion ($67 billion) in AUM. That compares with 45 master agents onshore selling 1,024 offshore funds provided by 78 foreign firms, with total AUM of NT$3.1 trillion.

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