MAS names sustainability head; Malaysia’s EPF appoints COO and CFO; GIC PE head for SEA leaves; State Super hires new exec; Hesta appoints chief growth officer, chief Debby Blakey appointed to corporate governance board; ex-BlackRock exec joins IQ-EQ in Singapore; HSBC AM builds direct real estate team; ex-Vanguard head of distribution joins LGIM; Sanne names Singapore head; and more
The consultancy has released a report on the Japanese market for investment advisors, which now manage over Ñ100 trillion ($1.1 trillion) û a big jump from the Ñ46 trillion ($509 billion) managed by the industry in 2003. Investment advisors (ie fund management companies) now run 54% of the Japanese pension market, having supplanted trust banks and insurance companies.
According to Cerulli, the top-five biggest investment advisory companies in Japan are: Barclays Global Investor, with 15.7% of the market; AIG Investment Management (8.4%); Nomura Asset Management (4.7%); Prudential Investment Management (US; also 4.7%); and Diam Asset Management (4.3%). These are June 2008 numbers. (See the December edition of AsianInvestor magazine for our rankings of the top 100 fund managers by assets sourced from Asia-Pacific, based on September figures.)
The retail funds market has collapsed. It was dealt an initial blow at the beginning of 2008 by the introduction of a new securities law that panicked distributors over liability and risk management issues. In the past few months, losses in the Nikkei and global stock indices have caused a rout. The retail funds industry has lost over 30% of its AUM in 2008, with over 90% of that flight coming from equity funds. Bond funds have remained stable and money-market funds managed a modest inflow, says Ken Yap, regional managing director at Cerulli in Singapore.
But the institutional market has remained steady. ôAUM levels for segregated mandates have remained flat,ö Yap says, thanks to steady inflows from pension funds, which account for 70% of institutional flows. The public sector is growing much faster than assets run by corporate plan sponsors, in part because the government assumes responsibility for pension assets and liabilities when companies go out of business or shut down their retirement schemes.
He suggests independent fund houses (not related to investment banks) have an opportunity to build market share from this segment in 2009. Pension funds will continue to adjust their asset allocation but remain in the market. However their investment strategies, which over the past few years embraced risk assets such as equities and hedge funds, are going to become more conservative.
Yap predicts independent fund managers running passive, low-fee mandates in the most conservative aspects of domestic and international fixed income will see the most business.
The Government Pension Investment Fund, JapanÆs largest public pension fund, is likely to become a bellwether for other plans, both corporate and public. Last year it adjusted its asset allocation to be more risk-averse. Its present allocation consists of 73% in domestic bonds, 10.5% in domestic equity, 8.2% in foreign bonds and 8.3% in foreign equities. The GPIF has never invested in alternative investments, and 70-80% of its assets are in passive mandates.
ôOther pension funds are trashing last yearÆs aggressive asset allocation and going back to the drawing board,ö Yap says. That said, he expects them to continue to outsource investments to the same degree.
Kwap property arm appoints CEO; VFMC names new CEO as Lisa Gray retires; MSIG Singapore promotes Mack Eng as CEO; Monroe Capital opens first Asia office in Seoul, hires head from Aberdeen; Vanguard Australia appoints new MD to relocate from US; HSBC AM expands EM debt team; Vantage FX hires from CGS-CIMB in Singapore; and more.
Financials and healthcare have been spotted as promising sectors, while several tech IPOs are on the way, including a $2.2 billion fintech firm and a GIC-backed e-commerce startup.
A strong recovery in the Asia Pacific private capital markets in 2021 sets up favourable hiring and compensation trends.
The $95 billion Korean savings will set up a separately managed account for real estate debt investment early next year in order to shorten decision-making and help it win deals in a crowded market.