Canada’s Sun Life Financial will establish an asset management company in Hong Kong this year, a senior executive has told AsianInvestor.
It will be the insurance and wealth management group’s second wholly-owned asset management firm in Asia, alongside its Manila fund house.
The firm is looking to implement a fund-of-funds structure, instead of the usual asset management model.
Roger Steel, Asia president for new markets and business development, said that the new Sun Life Investment Management unit will likely start operations this year as it is just waiting for licences to be approved.
Instead of a traditional asset management operation that has traders and an investment research team, Sun Life has chosen to operate as a fund-of-funds manager. Hence, the new firm will have a fund selection and fund monitoring team. It has already identified the key staff who will man the office, but Steel declined to name them.
Alongside its Philippines business, Sun Life also has asset management operations in China and India but through joint ventures.
On why a fund-of-funds approach was chosen, Steel said: “We have an open architecture philosophy for Hong Kong, which works very well in this market. Hong Kong has a vast number of asset managers and there is a proliferation of products. We see a lot of merit in cutting through that.”
Steel also noted that in the discretionary portfolio, it is generally difficult to communicate to clients about taking money out from underperforming managers, hence there is a tendency to stick to these managers.
“We want to have the liberty, if someone is underperforming, to fire and replace and move the money somewhere else and give clients a better deal and performance,” Steel added.
In Hong Kong, Sun Life operates in life and health insurance as well as wealth business, which essentially involves mandatory provident funds (MPF). Selection of funds and managers for the MPF and investment-linked products are conducted by the local product team and the International Investment Centre (IIC), which is Sun Life’s Canada-based internal fund selection centre.
“The IIC will have a role in overseeing the asset management company in Hong Kong. With the new capability, we will continue to innovate in terms of products,” Steel added.
The involvement of IIC will give the local asset management firm leverage in terms of tapping the best managers globally. Steel said Sun Life, because of its huge pensions business in Canada, has global preferred partnerships with global asset management firms, such as BlackRock and Schroders, which allows Sun Life to have the first look at products from these managers.
“We get boutiques and start-ups but they find it hard to be on our platform. The IIC standard in fund and manager selection is very exacting,” he said.
Sun Life has been expanding its asset management business globally. In the second quarter of this year, it expanded and diversified its asset management business. It announced the acquisitions of real estate investment manager Bentall Kennedy and investment manager Prime Advisors, and completed the acquisition of fixed income specialist Ryan Labs in North America, which will be part of Sun Life Investment Management.