Principal GI beefs up regional distribution

Principal Global Investors is boosting its Asia sales team with an eye on China's RQFII programme and the mutual recognition programme between Hong Kong and the mainland.
Principal GI beefs up regional distribution

Principal Global Investors is positioning itself to take advantage of Asia’s growing investor base by expanding its distribution platform, product line and investment capabilities in the region.

This includes researching ways to tap the renminbi-denominated qualified foreign institutional investor (RQFII) programme and the proposed mutual fund cross-border recognition scheme between Hong Kong and mainland China.

To boost its distribution reach across Hong Kong and Singapore, the firm has hired Jane Fung from Old Mutual Global Investors (OMGI) as head of funds distribution in Asia.

She is due to start on October 3 in Hong Kong, having recently left Old Mutual, where she was Asia head of distribution, as reported.

Fung will head efforts to get the firm’s global fund range – including Dublin-domiciled Ucits funds – onto the distribution platforms of wholesalers and private banks in the region.

“This will give us better access to key intermediaries, including IFAs, fund selectors and key investment platforms, as well as the growing high-net-worth population in Asia,” Andrea Muller, Asia CEO of Principal GI, tells AsianInvestor. “There’s a great opportunity with the amount of growing wealth in the region.”

Fung will focus on key investment platforms based in Hong Kong and Singapore initially, but as Muller notes, “her role is clearly regional.” As such, she will begin meeting intermediaries and investors in China, Indonesia, Korea, Malaysia, Taiwan and Thailand in the coming months.

PGI aims to add to the Asia funds distribution team by the first quarter next year as the firm wanted Fung to be part of the decision-making process, Muller says.

At OMGI, Fung was responsible for the company’s regional sales and marketing strategies. She previously held similar roles at Credit Agricole Asset Management and Baring Asset Management, both in Hong Kong.

Her appointment follows that of Gaurav Kumar, who was named Dubai-based head of funds distribution for the Middle East earlier in June.

The second part of the firm’s regional growth plans involve expanding its investment capabilities in Hong Kong.

At present, its Hong Kong office has a team of four investment professionals which support its Hong Kong, China and global emerging markets strategies. They work alongside a team of five investment executives in Singapore. PGI plans to add several fixed income investment staff to its Hong Kong staff in 2014 to support its offshore RMB initiatives. Muller declines to offer more details.

In addition, PGI’s parent, Principal Financial Group, is focused on building out its product development capabilities in Hong Kong to take advantage of initiatives such as the renminbi-denominated qualified foreign institutional investor (RQFII) programme, which allows offshore investors to invest in mainland China via RMB.

Principal has not yet applied for an RQFII licence with Chinese regulators, Muller says. “We’re closely monitoring what’s happening,” she said, adding the firm is in discussions with regulators.

It already has a qualified domestic institutional investor (QDII) licence through its joint-venture with CIMB Group and a QFII licence, allowing it to invest in China with US dollars.

“The next step is RQFII,” Muller says. “It’s going to be important to take advantage of RQFII and establish a presence. We need to assess investor preferences and develop appropriate products.”

Principal is also keen on the cross-border mutual funds recognition scheme between Hong Kong and mainland China, which when launched will allow for RMB mutual funds to trade in each others’ markets, although many questions remain, and some are sceptical this will be happen soon.

She declined to offer a timeline or more details on the firm’s RQFII and mutual fund initiatives, other than to say that much of it depends on the plans of Hong Kong and China regulators.

With the addition of Fung, PGI’s Hong Kong office now totals 13. The firm also has a 28-strong office in Singapore, with nine of the Lion City employees focused on equities and Reits.

PGI managed $289.1 billion as of June 30.

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