RBC Global Asset Management, the funds arm of Royal Bank of Canada, plans to build a six-strong Asia sales and marketing team following its hire of Sharon Yang last month to head Greater China coverage.
The aim is to boost the tiny amount of client assets it sources from Asia Pacific. As of June 30 last year, the region only accounted for 0.6% of its total AUM, as against 76% for North America and 23.4% for Europe (which includes UK-based BlueBay Asset Management). Its AUM stood at $270 billion as of end-March 2016.
While RBC GAM has a 10-strong Asia and Japan equities investment team in Hong Kong, it has spent relatively little on sales and business development resources so far.
Greater China and Singapore are the firm’s main focus markets in Asia for the coming 18 months, and it is eyeing institutions, family office and private banks, said Asia head Ken Tam. He pointed to growing demand among mainland investors for increasing their global allocations and steady liberalisation of investment regulations in China. Overseas investments have been discussed by mainland investors for nearly a decade, but not many of them have made the move, he added.
Of course, competition among fund houses is increasingly fierce in Greater China, but Tam argued that it was not too late to tap opportunities there, given the firm’s bullish expectation on the mainland market’s size and potential for growth. Chinese investors’ foreign exposure is still relatively small, he noted.
Shanghai-based consultancy Z-Ben Advisors projected that China’s outbound investment flow will soar sixfold to $532 billion by end-2021 from $90 billion in 2015, but warned that all asset managers are targeting mainland clients, making this a highly competitive space.
Tam conceded RBC Global AM’s brand is not a well established one on the mainland or Asia as a whole, but pointed to the firm’s “strong culture in risk management and long-term investment” and said it took a steady, step-by-step approach to growing its business and hiring.
Tam joined last August to lead the firm’s sales and business expansion in the region, having previously served as head of North Asia sales at Deutsche Asset & Wealth Management and before that North Asia head at JP Morgan Asset Management.
Before joining RBC to run the Greater China team, Yang was deputy chief executive and head of business development at GF International Investment Management, Guangzhou-based GF Fund Management's Hong Kong arm. She has also worked at software provider MSCI-Barra and US fund house BlackRock.
A big focus for asset managers in China is insurance firms, which have been fairly slow to boost their foreign assets in the three-and-half years since the mainland regulator raised the permitted overseas allocation from 5% to 15% in October 2012 and widened the scope of allowed investments. While they boosted their overseas assets by 51% to $36 billion last year, from $24 billion at end-2014, their foreign allocation still only represents 1.89% of $1.9 trillion in total AUM. The biggest players, such as China Life and Ping An Life, have indicated their plans to boost foreign exposure, as reported.
International fund managers are prioritising onshore business in China as likely to be the priority for them the coming five years, followed by outbound then inbound investment business. In an audience poll during the FundForum last month in Hong Kong, 76% of the audience said onshore business would be the most important for them, while 19% said the same for outbound and 4% inbound.