Investment in Asia to rocket

Assets under management (AUM) in Asia excluding Japan are expected to nearly double by 2015, according to research conducted by Cerulli.

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The report, co-sponsored by Citi and Mirae Asset Global Investments, claims AUM could grow to $4 trillion (£2.5 trillion) due to expanding middle classes and increased interest from foreign investors.

China is seen as the biggest driver of growth, with Korea becoming a significant force.

The report also examined the conflict between Western and local investors in the Asian sphere, concluding that the local relationships and cultural understanding of regional managers gave them the advantage.

However, the report claimed that local managers faced the same difficulties as Western ones when attempting to expand across Asia, due to the heterogeneous nature of the region.

In terms of products, the report claims mutual funds, though they only have an 8 per cent share of wealth compared to 14 per cent in 2007, will be a major driver of growth, although exchange-traded funds (ETFs) are quickly growing in popularity.

Asia still appears to be a difficult place for independent financial advisors to gain meaningful traction, while there is evidence that institutional clients are growing in sophistication without need of outside help.

China’s currency, the RMB, is key for the outlook in Asia, with steps being taken to improve its convertibility and accessibility.

The report believes that a fully convertible RMB would transform the power of Chinese domestic asset managers, as they will see increasing demand, not just for Chinese assets, but also for the currency itself.

Jae Sang Koo, vice chairman and CEO of Mirae Asset, claimed the report was ‘a timely insight into the investment opportunities provided by Asian emerging markets’.

‘The research highlights how developments in emerging market products, such as high yield instruments, RMB-denominated funds and ETFs, will likely maintain the industry’s rapid growth rate.’

Jae Sang Koo believes the firms that have ‘the ability to think globally but act locally will be the victors’ in the rapidly expanding Asian asset management sector.

Ceruli surveyed 30 local and international asset managers operating in Asia, representing 32 per cent of AUM in the region, for the report.

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