After two tenures, AsianInvestor's 2021 Standout CIO Jang Dong-hun looks back on the past six years at Korea's Poba with satisfaction.
According to the company, Pioneer has garnered 18 distributors so far, selling its 16-strong range of mutual funds including European and US equities as well as global fixed-income and other mandates. Edmund Lacis, PioneerÆs senior vice president and Asia region head of sales and distribution in Hong Kong, says three more products are in the pipeline: global high yield, global equity and global technology funds.
ôThe focus of the Taipei office will be to develop institutional mandates for our offshore funds,ö he says. ôWe are also trying to introduce a broad range of fixed-income funds as we see opportunities there. Our asset base is split 60/40 between equity and fixed-interest mandates, but in the long term we see bond funds increasing because investors are less likely to take profits from the asset class.ö
There may be barriers to doing this, however, given that PioneerÆs offshore funds are domiciled in Dublin and are set up under European Ucits-3 rules. This regime allows fund managers to use derivatives including credit default swaps in fixed-interest funds, but TaiwanÆs Securities and Exchange Commission does not allow this.
ôUcits allows for greater flexibility in investments,ö Lacis explains. ôIt will be difficult to place that kind of restriction on the manager of $5 billion in European fixed-interest funds. We will work to gain approval to use Ucits-3 powers and show the regulator that we have the right controls in place.ö
In terms of sales opportunities, Lacis concurs with market predictions that the public distribution of offshore funds in Asia ex-Japan is set to increase at 15% a year to hit some $110 billion in 2010, across both institutional and retail investors. ôFour of the largest pension funds in Taiwan have put money offshore,ö he says. ôThere are also corporations that have pension-fund or balance-sheet money to invest that have put money into our short-term bond funds.ö
Mr Lacis adds that TaiwanÆs national pension scheme, with investment perameters set by the central government, could later develop to a style similar to Hong KongÆs Mandatory Provident Fund, and, if this happened, Pioneer would seek a slice of the action.
The retail market may be a harder sell for the company, however, with 50% of household savings in Taiwan held in bank deposits, compared to 10% for the US. Pioneer runs a fund-of-hedge-funds mandates as well as its mainstream portfolios and, Lacis says, Taiwan could present a market for such products, but only through private placements to sophisticated investors and thus subject to stringent investment restrictions.
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