Every year, AsianInvestor's editorial team conduct an intensive analysis of the region's leading asset management service providers, fund products and asset managers, to ascertain the top organisation of the previous year.
The winners of these categories must combine a mixture of business performance, growth and progress, measured on both quantitative and qualitative criteria. Below, we detail why we chose this year's asset service categories, which comprise the leading custodians, best tax auditor, standout index provider and top law firm for asset managers.
BEST LAW FIRM, ASSET MANAGEMENT
The US law firm has had a busy period. Its Hong Kong asset management team headed by Effie Vasilopoulos has been advising the territory’s government on its implementation of an updated limited partner regime to make the city a modern hub for private equity funds.
The work is all but complete, with the legislative council expected to conduct a final vote on the legislation in the summer. As part of its ongoing advisory efforts, Sidley Austin has helped conduct education events and webinars. which have included senior government and Hong Kong Monetary Authority executives, to discuss the incoming regulations.
Sidley Austin’s Singapore office is strengthening too. It was one of only four firms to be granted a license by the Ministry of Law in the latest round of approvals to practice local law – an important development given Singapore’s growing importance as an asset management hub. Its rising importance was underlined when it was tapped by the Monetary Authority of Singapore accompany it on a North American roadshow to discuss the variable capital company (VCC) regime with fund houses and institutional investors.
The US-headquartered firm has also been adding professionals. In January 2019 it promoted Huberta Chow, who is based in its Hong Kong office, to counsel. In addition, in August 2019, David Lee joined as counsel to further bolster its fund formation capabilities.
Across the region as a whole, Sidley Austin established well over 60 funds in the 18 months to the end of 2019, which raised tens of billions of dollars of capital. The law firm now represents more than 500 fund-related entities across the region.
BEST AUDITOR, FUNDS AND TAX
2019 was a fairly busy year for funds in Asia, and EY reflected that. It managed to greatly expand the number of funds it was supporting over 11 administrators.
The company boasts some very prominent asset owners as well as fund houses as its clients. These include leading global fund managers, superannuation funds and some of the leading sovereign wealth funds of the region – several of which paid compliments to EY on its tax and auditing service support.
In terms of asset managers, EY offers services to eight out of the top 10 asset managers by size and it audits the funds of six of them.
In addition, the accountancy firm has played a key role in Hong Kong’s plans to update its limited partner regime, acting as a key adviser, particularly over the tricky discussions about tax and ensuring the territory is an appealing place to set up new funds for general partners. And in Singapore, it has worked with the Monetary Authority of Singapore on the tax implications of the variable capital company structure and the Asia funds passport.
EY has been busy on the technology side too, establishing several WAMApps, a risk management platform to improve fund auditing. The new system has helped gain the company over $20 million in new deals.
BEST GLOBAL INDEX PROVIDER
S&P Dow Jones Indices
Over the past year, S&P Dow Jones Indices has embarked on a spate of growth across its Asia Pacific operations. The index provider launched over 150 new Asia Pacific and emerging market indices during the year.
As has increasingly become common, environmental, social and governance instruments have also gained a lot more traction. Last April, S&P DJI introduced the S&P 500 ESG Index, and it followed this with the launch of the S&P Global ESG Index Series, offering ESG-complimentary versions of its popular benchmark index products.
S&P Dow Jones Indices gained new clients too, including the National Taipei University College of Businesses and the Taiwan Institute for Sustainable Energy, which appointed the index provider as its custom calculation agent for the Taiwan Sustainability Value Index (TWSVI). The index tracks the performance of top companies that corporate sustainability in Taiwan.
Another noteworthy new step was S&P DJI’s launch of the S&P Global 1200ESG Shariah, a global index that combines Shariah standards with its updated ESG framework. That is likely to generate more product interest in the likes of Malaysia and Indonesia in particular.
All-told, S&P DJI had 1,219 exchange-traded products linked to its indices globally and accounting for $1.6 trillion in assets. That represented a roughly 27% market share, over 10 percentage points more than the next-closest index provider.
Close to 300 of these ETPs were listed in Asia, and they represented close to $30 billion in assets under management, more than 40% higher than the previous year. One example of its success was when China Southern Management launched an ETF in China based on S&P DJI’s A-share LargeCap Low Volatility High Dividend 50 Index.
BEST GLOBAL CUSTODIAN FOR MUTUAL FUNDS
HSBC Securities Services
The mutual fund servicing capabilities of HSBC Securities Services remain highly capable, and during 2019, they expanded even further.
A principle success of the organisation was its ability to penetrate India, a market in which it previously it had not had major sucess. It beat out rivals to become the custodian for Franklin Templeton’s local business. Clinching that mandate, in which it was appointed both custodian and fund administrator for well over $10 billion in assets, helped HSS India more than double its business during 2019.
The custodian also continued to build out its China business, as it prepared for a likely opening of the market and potential local custodian licences this year. Its China assets under custody (AUC) grew by close to two-thirds in 2019 alone. The business also registered strong AUC growth in Taiwan, it is one of Malaysia’s largest players, and it was appointed a direct custodian for Credit Suisse across an array of Southeast Asian countries.
Meanwhile in its home-from-home, HSBC Securities Services notched up a new first when it was appointed the custodian and fund administrator for Pacific Hawk, the first open-ended fund company to be launched in Hong Kong, in October 2019.
All-told, HSBC Securities Services administered close to 4,000 funds in Asia by the end of last year, and its assets under administration were nudging up towards $1 trillion, a growth rate of well above 10%. It remains an impressive business.
BEST GLOBAL CUSTODIAN FOR ASSET OWNERS
The Asia business of Northern Trust enjoyed a healthy 2019, with the organisation recording growth of well over one-third in additional business during the year from its clients.
Northern Trust did a number of things to improve its regional services, including expanding its fund coverage to include the Cayman Islands, and further expanding its use of Blockchain – adding an ability to deploy legal clauses as contracts using the ledger technology.
Other service expansions included Northern Trust joining Australia’s High Value Clearing System, and Northern Trust partnering with BondEvalue to offer fractionalised bond ownership and integrating with new management service providers like Bloomberg Asset and Investment Manager.
Other standouts to its business included notable new clients. It gained a mandate from a Chinese insurer, was appointed to new positions with several sizeable family offices and endowments in Australia and Southeast Asia. Most impressively Funds SA of Australia appointed Northern Trust for a A$35 billion ($24.08 billion) asset servicing and investment administration mandate last year.
All-in-all, Northern Trust continued to boast a healthy track record in the region during 2019. By the end of the year, it had seen almost a three-quarters rise in its regional assets under custody over the previous five year.
BEST BANK FOR CROSS-BORDER CUSTODY
BNP Paribas Securities Services
Despite not being one of the largest custodians operating in Asia Pacific, BNP Paribas Securities Services’ vibrant cross-border operations continue to excel.
The company reported several pioneering steps during 2019, including becoming the first to support pilot firms that used Singapore’s new VCC structure, which was introduced in January 2020.
Other standout business included supporting the first products to use the Hong Kong-Switzerland mutual recognition fund (MRF) scheme, as well as supporting similar Hong Kong-UK, Hong Kong-France and Hong Kong-Luxembourg MRFs. Plus, it was appointed to be the custodian and administrator for Nikko Asset Management of Japan’s first passive exchange traded fund to be domiciled in Hong Kong.
BNP Paribas Securities Services was also selected to provide clearing, settlement and custody to Huatai Financial when it became the first client to use the Shanghai-London Stock Connect scheme to raise funds on the London Stock Exchange, marking another first in its cross-border capabilities.
Other notable achievements included enabling New Zealand-based investors to access Chinese renminbi bonds and supporting a leading French asset manager when it launched an infrastructure debt fund in the region, underlining BNP Paribas Securities Services’ growing capabilities in alternative asset classes.
All-told, its Asia assets under custody grew by close to 20% during the year.