Malaysia’s AmInvest has outsourced certain middle-office functions – including trade matching, investment accounting and reporting – to State Street, together with custody services.
This is due partly to a trend for institutional investors in the country to select their own custodians rather than using those of their asset managers, and partly to AmInvest's overseas ambitions. This is in terms of both opening new offices outside Malaysia and receiving wider mandates from more institutional investors.
“We are managing a growing pool of offshore assets for our investors,” says Harinder Singh, chief operating officer of AmInvest. This is why it is important to have a global custodian to support middle-office functions such as trade matching, settlement and fund accounting in these local markets, he adds.
AmInvest, which runs RM32.8 billion ($10.7 billion) across conventional and sharia-compliant funds, also operates in Brunei and last year set up an office in Indonesia, where it is due to launch a bond fund in May.
Singh says State Street won the mandate over five other custodians, following an 18-month selection and due diligence process. It took the custodian nine months to complete delivery of the middle- and back-office outsourcing service.
In recent years, Asian fund managers have been growing more receptive to outsourcing middle- and back-office functions to custodians. This is because by transferring these administrative and operational functions to specialised service providers, they can focus more time and resources on investment management.
Moreover, global custodians’ reach and connections with settlement and clearing exchanges saves asset managers from continuously racking up capital expenditure whenever they expand into a new market.
Nick Wright, head of State Street’s Southeast Asia global services and markets business, says the firm will expand its existing footprint in Kuala Lumpur via a dedicated local client-servicing team to support AmInvest.
The two firms say the deal breaks new ground in Southeast Asia, given that AmInvest is one of the biggest home-grown Asean fund houses.