After speeches in Milan (Il Salone del Risparmio) and Stockholm (Nordic Fund Selector Forum), I spent last week in Asia to see clients and present at the Asia Fund Forum in Hong Kong. As usual, I stayed at the Upper House at Pacific Place.

The Upper House continues to take market share from older brand names like the Mandarin or Four Seasons, by offering more space, great service and a much more modern IT framework – not to mention the fantastic view at Cafe Gray for food or drinks (Old vs New In Emerging Markets) – it is a reflection of what the fund industry is seeing for fund and manager selection – an optimal mix of investment performance, client service, organizational stability and brand to stand out in a crowded marketplace where flows are either marginal or reach blockbuster status.

Asset International/Strategic Insight had a booth at the Asia Fund Forum 2012 with our local team for the region, as well as an overview of our various other subsidiaries, among them aiCIO, Global Custodian, and our newest addition, “Philanthropy Management“.

PRE-CONFERENCE DISTRIBUTION & EMERGING MARKET SUMMIT

AI/SI analysts at FF Asia 2012 – A. Siu; B. Liu; L. Carpenter

Monday started out with two summits: Asia Fund Selection & Distribution and Emerging Markets.

My video discussions for Monday were with two leaders in their respective fields – Mussie Kidane (Head of Fund Selection for Pictet in Geneva) and Jaime de la Barra (Founding Partner, Compass Group in Chile).

Kidane/Enskat – Global Trends in Fund Selection

The discussion with Mussie centered on trends in fund selection for private banks and wealth managers, including key selection criteria for manager and fund selection post-crisis.

Pictet is a unique example of global fund selection as it uses a wide range of managers and products in a partnership model to provide practice management and value-added services to its private bankers and wealth managers – with 47 funds by 45 managers in a long-term setup.

Moreover, Mussie has been leading fund selection efforts for well over a decade and thus is able to put many of the pre- and post-crisis trends into perspective.  I have written books about global fund distribution since 2004 – the last two books in 2011 were “Building Bridges” and “Seven Secrets of Distribution“.

Enskat – SI: 7 Secrets of Distribution

One of the main changes post-crisis in terms of manager selection methodologies has been around the growing importance of organizational stability and brand, on top of outstanding client service and track records. Stay tuned for the video of our discussion.

The summit started out with two panels on fund selection, with representatives from Citibank, OCBC, Barclays, Bank of Singapore, Hang Seng, and AA Advisors.  

Asset International/Strategic Insight in partnership with the Nomura Research Institute recently published a public whitepaper on “Asia Fund Distribution“, to provide an overview of regional and country trends for Asia, along with company and product case studies on who has been winning market share post-crisis.

The afternoon sessions focused on private banking, insurance, and advice models, as well as HNW research and a global view on manager selection. Firms presenting included Vontobel Group, Scorpio, Towers Watson, JP Morgan Private Wealth Management, Fubon Bank, HSBC Insurance, I-Pac Financial, Propinquity, Invesco, UBP Asset Management, and BlueBay.

For the Emerging Market summit, investment and distribution views included Henderson Global Investors, Lloyd George, Silk Invest, An Zhong, Credit Suissa Private Banking, Societe Generale Private Bank, Al Rahji, Kotak Mahindra, and more.

Jaime de la Barra presented a look at the Andean Three vs. Brazil and Mexico to put the region into perspective.  My discussion with Jaime naturally focused on the increasing links between Asia and Latin America and how asset managers and distributors can take advantage of it.  His firm, Compass, for 25 years has been representing a variety of leading fund managers in Chile and the region.

Importantly, a central theme of the Strategic Insight research on Latin America (both for our new monthly database as well as in my most recent book) is how heavily institutions for example in Chile, Peru and Colombia are invested in Asia and how much it has benefited international fund houses – often via local partnerships.

State of the Industry – Latin America

A good example of the success for these partnerships is the sub-advisory work between Compass and South Africa-based Investec.  Investec under CEO Hendrik du Toit has became one of the top cash flow firms for cross-border funds worldwide, with 2011 flows matching much larger firms such as BlackRock, Franklin Templeton, JP Morgan or PIMCO.

MAIN CONFERENCE – DAY ONE: REDEFINING THE ASIAN INVESTMENT MANAGEMENT INDUSTRY

Barra/Enskat – Asia & Latin America

On Tuesday, John Calamos kicked off the main conference with an overview of global investing from 1970 to today.

Then the conference had a selection of panels to discuss the state of the asset management industry in Asia. Shiv Taneja laid out a framework and Steward Aldcroft then led a session on “Asian Asset Management at 20” with Steve Chiu (Bosera), Mark Konyn, and Jack Lin (Pioneer).

Mark Konyn has been a leader in the Asia asset management industry for decades, and most recently was CEO for RCM in the region with a focus on the institutional side of the business.  He has written extensively on the region (including a book on investing in Mandarin) and has a regular column in the fund management section of the Financial Times (and today announced his new CEO role for Cathay Conning Asset Management).

My discussion with Mark focused mostly on the big picture for Asia and how the region has been doing in a global context. Moreover, we speculated on how the next decade could look like and how asset managers should position themselves to take advantage of the various growth opportunities (North vs. Southeast Asia, institutional vs.retail, HNW vs. middle class growth, local products vs. cross-border themes, et al). The video will be available soon.

Konyn/Enskat – Asia Institutional Asset Management Trends

The first CEO panel looked at the “Regionalisation of Domestic Asset Management“, with panelists Anthony Ho (China Asset Management), Peng-Wah Choy (Harvest), Gerard Lee (Lion), Charles Wang (E-Fund), and Dr King Lun Au (BOCHK) – moderated by RBC Dexia (Brent Reuter).

Part of the discussion centered on how to approach domestic power centers such as China and how to make the transition from a local fund firm to a regional house – organically or via acquisition.

Gerard Lee was in favor to just go out and buy someone, while the Chinese chief executives were a bit more hesitant from an integration standpoint.

Then the tables turned.

The second CEO panel looked at “the Globalisation of the Asian Investment Management Industry”, with Graham Mason (Eastspring), Oliver Bolitho (GS), Joanna Munro (HSBC), and Arne Lindman (Fidelity).

Main points of discussion included the recent frictions between global cross-border vs. local opportunities in the aftermath of accumulators and minibonds in HK, as well as how to transition from an institutional to a retail driven business.  Undeniably, brand has started to play an integral part post-crisis, as asset holders in the region are looking more at the overall brand and name recognition of global asset managers.

Fidelity of course is unique inasmuch as it has built a direct name recognition and brand with end investors in the last 40 years, while for most others the business is dis-intermediated. But even for Goldman Sachs, Oliver highlighted the importance of brand when fund buyers are assessing new investment strategies and asset classes.

MAIN CONFERENCE DAY TWO – UNCOVERING INNOVATION IN THE ASIAN INVESTMENT MANAGEMENT INDUSTRY

After the first morning sessions on the future of the industry in Asia, presented by Navtej Nandra (Head of Morgan Stanley International), and a business model CEO panel with Tony Edwards (Robeco), Erich Gerth (Aviva), Grant Bailey (ING), and Mark Browning (Franklin Templeton), the head of investment funds for the SFC commented on “is regulation stifling the global industry in the long-term”?

Clearly, Alexa Lam sees the relationship between the SFC and the industry as a partnership, but the interplay between global and local vehicles and global and local regulation is becoming a crucial point for the future growth of asset management.

I then had the pleasure of discussing brand with BNY Mellon’s APAC CEO Alan Harden.

Harden Enskat – The Importance of Brand in Asia

Please review the full discussion in a separate blog here, “The Importance of Brand”.

The afternoon continued with a CEO thinktank on product innovation, with Gerry Ng (Barings), Andrew Lo (Invesco), Lennie Lim (Legg Mason), Lieven Debruyne (Schroders), and Ajay Bagga (Deutsche Bank).

Schroders in 2011 had a blockbuster local product in Hong Kong in a distribution partnership with HSBC.  Its multi-asset income fund attracted over a billion in net cash flows in some six weeks, and is now rolled out globally – an example of reverse product engineering that could be come more commonplace in the industry should UCITS loose its competitive advantage as an accepted global vehicle and passport.

The final discussion for the day looked at the institutional landscape, with Young Chin (Pyramis), Stephen Roberts (Mercer), Eleanor Wan (BEA Union), and Kevin Hardy (Northern Trust).

Aberdeen Asset Management, one of the boutique investment management firms turned Goliath on the strength of their emerging market and global equity expertise (see the discussion with Alan Harden on Martin Gilbert and Aberdeen), on Wednesday night hosted an amazing wine pairing dinner at the China Club.

China Club HK, Aberdeen

MAIN CONFERENCE – DAY THREE: INVESTMENT & ASSET ALLOCATION IN A VOLATILE ENVIRONMENT

The last day of the conference focused more on the investment and asset allocation elements of financial services.

I was interviewed by Kalpana Fitzpatrick on portfolio construction and asset allocation for Asia/Emerging Market investors compared to Europe and the US.  Our research, discussed as “metatrends” in my latest Strategic Insight book ‘State of the Industry’, suggests some $4 trillion in investment solutions worldwide and a growing trend towards fee-based advice and investment wrappers.  Favorite themes globally are high yields, multi-assets, and absolute return wrappers.

SOTI 2012

State of the Asian Asset Management Industry

Lastly, my senior research analyst Lise Carpenter interviewed the head of business development for BNP Paribas’ FundQuest.  Her focus in the interview was on the role of platforms both for portfolio construction as well as fund selection.

FundQuest / Strategic Insight – L. Carpenter

All in all, some 20-30 meetings with senior executives in Asia and a dozen discussions with Italian and Scandinavian fund buyers ended a busy two-week world tour.