Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
That saw asset management become one of three businesses within the firm, alongside investment banking and wealth management. Symbolically the firm scrapped the old ôCredit Suisse Asset Managementö name and now presents itself simply as Credit Suisse.
David Blumer, Zurich-based CEO of the asset management division and a member of the executive board, says the new direction has paid immediate dividends, including winning net new assets of over $40 billion since the reorg was officially launched last June.
He would not break down Asia-PacificÆs contribution to that but acknowledged that sourcing assets from Asia has lagged the European and American arms relative to the size of business at the investment and private banks.
But the firm has ratcheted up achievements in the region, and Blumer says Asia is its the fastest-growing geography. It has two new onshore fund joint ventures, with ICBC in China û now the third-largest Sino-foreign funds JV û and Woori Bank in South Korea. Its investment teams in Tokyo, Australia and Singapore have been incorporated into a more global platform. It is working on distribution arrangements around the region.
Its most recent win is in Korea, where it and Morgan Stanley Investment Management were named strategic partners to the National Pension Corporation.
ôThis is the kind of model I think you will see more of,ö Blumer says.
The role involves more training, knowledge and technology transfer and other means of education and support, as well as running money. It brings into play more than just asset-management skills.
In Europe, the firm is also speaking with clients about a complete outsourcing of investment management and conducting its own due diligence on third-party firms, akin to a manager-of-manager program. This is the level of discussion that Blumer and his top lieutenants believe will soon come to Asia as well.
ôThe old way of doing things where you walk into a clientÆs office and tell them about your fund û clients donÆt want to hear that,ö says Tony Iliya, executive vice chairman and head of asset management for Asia Pacific. ôThey want to know what else you can do. I know itÆs a clichT but they want to hear about solutions.ö
These executives, both of whom came from the groupÆs investment bank, argue integration will drive growth in asset management. By forging these different functions together, they believe they have capabilities across product lines and services that few other groups can rival.
Being able to structure products with the investment bankÆs derivatives expertise and offer that through both asset management and private banking creates not only more options for clients, but more ways for the group to capture revenues. Using JVs onshore not only allows the firm to sell global products into a local market, but puts the group in touch with local institutions that can lead to business in banking.
This is why quoting a headline figure such as AUM doesnÆt show the true scale of its asset-management business, Iliya says.
From a product perspective, global demand has been keenest in fixed income, alternatives and multi-asset products. Investors require both traditional beta bond products as well as high-yield ones. They are adopting a core/satellite approach within alternatives, allocating to hedge funds, private equity and real-estate products both for core exposures via funds of funds or indices, as well as to more volatile single strategies in a bid for higher alpha. High-net-worth individuals are the main clientele for balanced funds.
Yet in some markets such as Japan, retail is the biggest part of the business, where Credit Suisse has developed a number of local third-party distributors for its international products as well as its local equity investments.
CS executives wouldnÆt be drawn on more concrete plans for asset management in the region. Blumer says the firm is happy with both of its joint ventures in China and Korea. Although ING Investment Management has set a precedent in Korea owning its own operation while maintaining a minority stake in a JV, Blumer says CS isnÆt about to go down that path. ôWeÆll see how the market and client demand develops, but thereÆs no reason to change at this point in time,ö he says, noting the Woori JV is only eight months old.
When asked about India, where the firm lacks an onshore presence, Blumer wasnÆt able to say much. He identifies India as a market where the firm is looking at options, but wouldnÆt say if he is talking with potential partners or drawing plans to enter directly û or whether any entry would be via the asset management division or another arm of the group. The firm has just launched a brokering operation there.
Blumer did rule out the notion of taking stakes in boutique managers, rejecting the strategy adopted recently by the likes of Morgan Stanley. ôIÆm not interested in a financial stake. It has to be a true partnership,ö he says, citing a relationship with Ospraie, a boutique that manages private equity into commodity plays.
Global investors are advised to look selectively at Japanese equities as the country recovers from lockdown and continues to improve corporate governance.
Weekly investor roundup: Sun Life weighs second ESG fund in HK; Korea's NPS reduces domestic equity allocation
Sun Life considers launching second ESG fund in Hong Kong as it banks on the growing theme; NPS lowers exposure to large-cap and other domestic shares; Temasek's Vertex Technology Acquisition Corporation becomes first special purpose acquisition company on the Singapore Exchange; and more
IHS Markit research points to better dividends but a lower payout ratio.
Omicron may have put the bite into the property sector, but commercial property in Asia Pacific is defying the odds in a challenging sector, says a CBRE report.