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Aug 31, 2015

Asia-Pacific investors bring portfolios in-house

State Street survey shows shift in management focus ‘shaking up’ firms in Asia-Pacific

Asset management firms based in Australia and elsewhere in Asia-Pacific face rising pressure from institutional investors increasingly bringing their portfolio management in-house, according to a survey by State Street.

Seventy-one percent of asset managers in the Asia-Pacific region say increasing demand from institutional investors for custom asset management options is ‘shaking up their business models’ and forcing them to seek to create new types of products to maintain their clients.

‘Growing client demand for bespoke solutions requires many asset managers to adjust their business models, particularly as clients move in-house and insist on more personalized service to help them manage their money,’ says Paul Khoury, head of State Street Global Services for Australia and New Zealand, in a press release. ‘The most enterprising asset managers are responding by bringing more to the table in their client relationships.’

The State Street survey also concludes that asset management firms based in Asia-Pacific are looking for acquisitions and other rapid routes to growth to help them achieve economies of scale as increasing government and regulatory initiatives open up the region to increased cross-border trading.

The Mainland China-Hong Kong Mutual Recognition of Funds program, which took effect in July, allows asset managers to distribute investment funds within the Hong Kong and mainland retail markets. The ASEAN Collective Investment Schemes, agreed upon by regulators last year, allow fund managers in Singapore, Thailand and Malaysia to offer regional collective investment products to investors in all three nations.

Overall, 84 percent of the survey respondents in the Asia-Pacific region say they see increased opportunity for growth in the coming 12 months, and 82 percent say they are likely to face competition in the coming five years from ‘an industry disruptor’.

‘Non-traditional market entrants could mount a serious challenge to asset managers in the region and globally,’ Khoury says.