Nordea Asset Management is in the process of building a new distribution platform in Singapore and aims to partner with a sub-adviser in Hong Kong or Singapore.
The firm, part of Sweden's Nordea Group, will add one senior sales executive to the distribution platform in the Lion City by the year-end, and is likely to hire a second in January, Philippe Graffart, head of fund distribution for Asia Pacific, tells AsianInvestor.
Graffart and these two executives will be tasked with selling the Nordea Ucits fund range, as well as funds managed by third-party firms, to institutions and accredited investors in Hong Kong and Singapore. The firm has no immediate plans to sell to retail investors in Asia, but will not rule it out, he says. Its global client-base is institutional.
The firm already has products on several platforms in Asia, including JP Morgan Private Bank, Julius Baer and UBS Wealth Management. “We already have a global distribution presence, so now it makes sense for us to establish a local team,” Graffart says.
He moved from Luxembourg to Singapore in September to take on the newly created regional distribution role. He joined Nordea AM as head of investment products in 2010, having previously worked at insurer and financial services company Nationwide Global and Fidelity Worldwide.
Nordea Group has operated corporate and private banking services out of the Lion City since 1980.
Nordea AM manages €150 billion ($201.4 billion) across 50 strategies in Stockholm and Copenhagen. These span equity, fixed income and alternatives with a variety of regional focuses, including Europe, emerging markets, the US and Asia. It manages 50 strategies firm-wide.
The alternatives bucket includes global Reits, CTAs, long/short equity and market neutral. The firm also invests in some private equity deals, mostly in the Nordic region, Graffart says.
It also sub-advises on €22.5 billion worth of funds for other firms, including T. Rowe Price, MacKayShields and Eagle Asset Management.
Nordea AM has no immediate plans to build an investment platform in Singapore and manage strategies out of the Lion City. The firm would prefer to partner with a sub-advisory firm specialising in Asian equity or fixed income.
“We’re in talks to start a partnership for Asian equity or fixed income [in Hong Kong or Singapore],” he says. “We probably won't bring in portfolio managers and fund managers on the ground in this first stage. But you never know.” He declined to offer more information on any potential partnerships.
Nordea's funds are all Ucits structures, which begs the question whether the firm plans to use other types of structures in Asia.
Ucits have been popular in Hong Kong, Singapore and Taiwan, giving investors access to international markets previously difficult to invest in. But the development of funds passporting schemes – the Hong Kong-China mutual recognition scheme, the Asean funds passport and the Asian region funds passport – could all provide local investors with attractive alternatives.
This brings forth questions about Ucits’ future – some even argue that the structure’s days are numbered in the region, such as BNY Mellon Investment Management's Asia-Pacific CEO.
Graffart acknowledges that Ucits could eventually lose some business once the passporting schemes become reality, although he suggests this won’t happen for five years at least.
“Some clients like to be offshore, and for them, Ucits will [continue to be] a natural fit,” says Graffart. But there are those who would rather keep their money onshore, meaning Ucits may lose that client base, he tells AsianInvestor. This isn’t necessarily a negative, he adds – rather, just par for the course as Asia’s mutual fund industry continues to develop.
“[A more localised fund structure would be] a natural development for Asian markets. Everyone is expecting it to happen,” he says. “The funds passporting scheme is something we’re watching closely. Like a lot of players, we’ll observe and see what shape and form they take, but I don’t think it will happen for the next few years.”
For the moment, the three proposed schemes, which are at different stages of development, remain separate. But some, such as State Street, argue they could merge within five years, whereas others say there are simply too many regulatory and logistical barriers between countries in Asia for that to happen.
Graffart is non-committal. “I would say the reason Ucits are successful is because all of the European countries are in the scheme. If you have multiple schemes within Asia, it becomes tricky – it won’t be a true passport programme.”