Mon, Dec 5, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Survey reveals most attractive markets and challenges of UCITS in Asia

Monday, April 30, 2012
Opalesque Industry Update - Hong Kong, Singapore and Taiwan remain the most attractive destinations for global asset managers’ Ucits distribution in Asia, according to new research by BNP Paribas Securities Services and Knadel, a specialist consultancy to the investment management industry. However, challenges remain around fragmentation, regulation and differences in culture which contribute to significant variations in take-up of Ucits in the region.

50 asset managers of varying size from Asia, Europe and the rest of the world were surveyed on their experiences of distributing Ucits funds in six markets across the region: Hong Kong, Japan, Malaysia, Singapore, South Korea and Taiwan.

75 per cent of respondents that distribute Ucits in Hong Kong, Singapore or Taiwan reported experiences that met or exceeded their expectations. Malaysia and South Korea emerged as smaller but rapidly maturing markets in the research while Japan, more focused on using local funds, is gradually increasing its appetite for Ucits.

One consistent theme outlined by respondents was the time and cost associated with registering Ucits funds in the region.

Hong Kong, Singapore and Taiwan: cross-border hubs in Asia
Hong Kong, Singapore and Taiwan, generally perceived as the region’s hubs for cross-border activity, were cited as the most popular Ucits markets with 29, 20 and 21 per cent of respondents respectively already distributing or planning to distribute Ucits in each market.

These three centres account for the majority of Ucits consumption in Asia. They benefit from the synergy of a strong asset management network, the experience of a large talent pool, and the infrastructure necessary to support distribution.

Respondents cited gateway access to other Asian markets, particularly China, user-friendliness, and excellent business opportunities as most attractive in Hong Kong, Singapore and Taiwan where distribution is dominated by banks.

In contrast, the time and cost of registering Ucits funds in the three hubs was identified as a significant challenge by respondents, who also reported a marked recent slow-down in the speed of approvals of Ucits in Hong Kong.

Malaysia and South Korea: rapidly maturing
With eight and 12 per cent of asset managers currently distributing or planning to distribute Ucits in Malaysia and South Korea respectively, these markets were reported to be less developed than the three hubs but rapidly maturing and offering significant opportunities. While small, Malaysia’s asset management industry is perceived as relatively sophisticated; against a backdrop of expanding household financial assets and increasing income, the signs are encouraging. However the main challenges identified by respondents were a strong preference for local funds and difficult legislative and regulatory environments.

South Korea, while noted for its business opportunities, was identified by respondents as still presenting challenges in terms of language and culture. The market has less international sophistication than the hubs and respondents reported a degree of reluctance towards foreign funds. However, South Korea is focused on protecting its local fund industry and local investors are less accustomed to buying funds from foreigners. Overall, the nation continues to capitalise on its economic success in manufacturing and other industries, and many expect regulatory processes to improve.

Japan: gradually increasing appetite Nine per cent of asset managers surveyed are currently distributing or planning to distribute Ucits in Japan, reflecting general market trends that indicate the country remains heavily in favour of domestic onshore funds.

As a result, the survey respondents indicated a lack of business interest in distributing Ucits into Japan. However assets under management have grown steadily in the past decade and penetration is low. Fund flows remain resilient and as local investment opportunities remain subdued, Ucits could be seen as a means to gain global exposure and diversification. Quotes Commenting on the research, Mostapha Tahiri, head of asset and fund services Asia at BNP Paribas Securities Services said: “Ucits is an excellent framework that has brought confidence and harmonisation to global asset management. While the take-up of Ucits in Asia has been successful, our research concludes that key challenges remain.

“Culture is important in terms of adapting to new jurisdictions, but asset managers must also address operational strategy and design service models that are fit for purpose. “Also critical to asset managers’ success with Ucits in Asia is choosing the right partner.

Managers must cut through the fragmentation and understand the intricacies of each market to tap into Asia’s undoubted growth opportunities. Therefore, they need partners with sound local expertise and an on-the-ground presence in the region’s markets. “Nonetheless, Asia has an excellent economic foundation to create a positive environment for Ucits. With global assets under management set to reach USD 4 trillion by 2015, Ucits remains the region’s most practical cross-border product today.” Full press release: Source

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. M&A - AllianzGI to acquire Sound Harbor Partners, SS&C completes acquisition of Wells Fargo's Global Fund Services business[more]

    AllianzGI to acquire Sound Harbor Partners Allianz Global Investors (AllianzGI), an active investment manager, announced that Sound Harbor Partners, a US private credit manager led by Michael Zupon and Dean Criares, have agreed to join its fast-growing Private Debt Platform. Under the te

  2. Europe - UK investors to pay more tax on money in offshore funds, Do you want to hand your money to super-algo or a Swiss banker?[more]

    UK investors to pay more tax on money in offshore funds From FT.com: Hedge funds in Dublin and Luxembourg are set to be hit by new rules that will force UK investors to pay more tax on the money they hold in offshore funds. As part of the government’s Autumn Statement on the country’s fi

  3. Hunt for yield pushes more investors into riskier assets[more]

    From FT.com: Pension funds and insurance companies have increasingly embraced riskier assets in their hunt for higher returns over the past five years. Alternative assets such as property, infrastructure, private equity and hedge funds have been bought up by institutional investors in a world where

  4. People - Nectar Financial hires senior investment team, Texas A&M replaces retiring foundation investment chief, Ex-Cadwalader partner Woolery makes another sudden exit, How to become a Python coder at a top hedge fund, by the co-CTO of Man AHL[more]

    Nectar Financial hires senior investment team Nectar Financial AG, a Swiss financial technology company for wealth and asset management, has announced that it has hired two key senior leaders to spearhead its digital asset management efforts. The company also announced that it has entere

  5. Activist News - Cognizant has introductory discussion with activist investor Elliott; to review letter, Starboard Value makes huge investment in Hewlett Packard, Hedge fund calls for removal of First NBC Bank CEO[more]

    Cognizant has introductory discussion with activist investor Elliott; to review letter From Indiatimes.com: Cognizant said it had an introductory discussion with Elliott Management after receiving the activist hedge fund's letter asking for a board shakeup, a buyback, a dividend and chan