Although the investment-linked product (ILP) business is stagnating in Singapore and Hong Kong, other Asian markets such as Indonesia, China, Taiwan, and Thailand are offering better prospects, says Cerulli Associates.
Indonesia has the highest growth potential among the four countries stated. According to fund managers Cerulli spoke to, the growth momentum remains strong even though the first ILPs were launched more than a decade ago.
Banks and insurance agents are pushing ILPs more, as compared to mutual funds, because of higher fee incentives. Banks typically have exclusive arrangements with insurance firms to sell their products, but there are no such partnerships with asset managers to distribute mutual funds.
However, if the country’s regulator, Financial Services Authority (OJK) decides to scrap upfront fees and exclusivity in bancassurance partnerships, growth prospects might be limited.
At the same time, OJK has raised the cap on overseas Shariah investments from 15% to at least 51% since November 2015. Cerulli notes that this may present an opportunity for fund managers to offer foreign-invested Shariah-compliant funds on ILP platforms, if regulators allow it.
Managers Cerulli surveyed for the Asset Management in Southeast Asia 2016 report ranked insurers as the channel they would increase their use of the most in the coming three years. Various reforms introduced in the past few years are likely to help boost fund distribution through this channel. Banks will also continue to push bancassurance sales, which significantly involve unit-linked products.
Wikimedia Commons. APFI and DoorFunds Launch a Digital Platform to Streamline and Standardize Fund Due Diligence Processes
The processes used by fund investors to gather information from asset managers has always been a time consuming exercise. But their need for transparency, speed of analysis and the ability to compare across qualitative information sets has never been greater!
The industry is coming together to co-create a new solution. Supported by the Association of Professional Fund Investors to represent industry best practice, key Fund Investors from 10 leading Distributors, such as Mediolanum, Santander, EFG and Pictet Bank are collaborating with 12 major asset managers, such as Aberdeen, Columbia Threadneedle, Franklin Templeton, M&G, Nordea Asset Management, Pictet Asset Management and Schroders. They aim to solve a common problem.
The problem
Within Fund Investor teams, much time is being spent collecting and organising fund information. Asset managers have to resource large teams to be able to respond to information requests in a multitude of formats. APFI reviewed dozens of its member Fund Investor firms’ due diligence questionnaires and discovered around 90% of questions are common. Furthermore APFI found that:
Historic practice and increased regulation is creating additional effort for fund investors and asset managers in fund due diligence
Fund investors are pursuing ways to reduce the time it takes to collect and organise information
The speed at which changes to fund information is communicated to fund investors could be significantly improved
Lack of standardisation and best practice in due diligence questionnaires creates additional effort for asset managers – DDQ work volumes have doubled in 12 months for some asset managers
Both asset managers and fund investors recognise there should be a better way to collect and organize fund information and, by doing so, to enhance customer outcomes.
The solution
This collaboration aims to bring fund due diligence into the modern age. A new digital platform called DOOR will maintain up to date responses to The Standard Questionnaire, allowing fund investors to access a robust set of common information at any time and separately ask additional questions specific to their needs – thereby removing the need for each fund investor to send common data requests. DOOR will be free of charge for fund investors to use.
Other benefits include:
Maintaining and advancing industry best practice standards, overseen by APFI
Quick and automated uploads of fund information by asset managers, meaning
resources can be redeployed
Provide fund investors with information on all available fund ranges
Improve fund investors’ user experience in selecting or monitoring fund holdings
Speeding up and democratising communication of changes to fund information between asset managers and fund investors
“In today’s world of information overload, this unique initiative can add significant value to the manager selection process. DOOR’s platform and technology can make a big difference by freeing up time for data analysis and critical thinking, and less time on data collection. More productive collaboration between fund investors and asset managers is always to be welcomed in our view.” Brian O’ Rourke, Head of Multi-Manager, Mediolanum.
“The industry needs to collaborate more to drive faster and more efficient communication of information. At APFI, we want to maintain and advance industry best practice and ensure greater transparency and ease of fund selection for our members.” Jauri Hakka, APFI Director.
“Standardisation in due diligence information means I can access the majority of the information I need without waiting weeks for a response. It will save me time and allow me to focus on that information that it most important to me. ” José María Martínez-Sanjuán, Santander.
“Asset managers and fund investors have common issues with fund due diligence. So, collaborating with them to solve these issues is an innovative approach. Adopting industry best practice and standardising the process will allow us to refocus resource on delivering a wider range of fund information to our clients. By employing a digital solution, we can ensure information is secure, up-to-date and relevant.” James Cardew, Global Head of Marketing, Schroders.
. PIMCO Hires Jeffrey Thompson as Executive Vice President and Portfolio Manager
PIMCO has appointed Jeffrey Thompson, as Executive Vice President and Portfolio Manager, to join its commercial real estate team as the firm continues its expansion of its global alternatives investment platform.
In this new role, Thompson will be joining an established commercial real estate platform where he will focus on CRE lending opportunities which is an important area of growth. He will be based in the firm’s New York office and will report to PIMCO’s Co-heads of U.S Commercial Real Estate, John Murray, Managing Director and Portfolio Manager and Devin Chen, Executive Vice President and Portfolio Manager.
”Jeffrey brings more than 20 years of experience as an investment professional to our accomplished commercial real estate team, which continues to find significant investment opportunities in this space globally, ” said Murray.
“We are excited to welcome Jeffrey to the team. As a tested portfolio manager in commercial real estate and private credit, Jeffrey’s hire further demonstrates the strength of talent and expertise we have at PIMCO,” said Chen.
Globally, PIMCO’s alternatives offerings span a range of strategies with more than 100 investment professionals overseeing hedge fund and opportunistic/distressed strategies, including global macro, credit relative value, multi-asset volatility, and distressed mortgage, real estate and corporate credit opportunities.
“PIMCO continues to look to attract the best investment talent globally and has hired more than 210 new employees this year including more than 40 investment professionals across alternatives, client analytics, emerging markets, mortgages, real estate and macroeconomics,” says Dan Ivascyn, Managing Director and PIMCO’s Group Chief Investment Officer.
Foto: Pexels. La industria de fondos irlandesa se prepara para crecer gracias al acceso al mercado chino
An agreement between the People’s Bank of China and Ireland means that funds domiciled in the country now can tap into a RMB 50bn (roughly €7bn) quota under the Renminbi Qualified Foreign Institutional Investor regime.
The quota means Irish funds can buy securities on local Chinese markets.
The news follows confirmation that the Central Bank of Ireland is able to accept applications from Ireland domiciled Ucits and AIFs to invest through the Shenzen-Hong Kong Stock Connect, notes Irish Funds, the body representing the cross border investment funds industry in Ireland. This adds to the existing agreement on the Shanghai-Hong Kong Stock Connect.
Looking ahead, Irish Funds adds that there are expectations of another boost for the Irish funds industry as and when indices start to include Chinese shares, which will mean Ireland domiciled ETFs will also be able to benefit from foreign investor interest in accessing Chinese assets.
Taken together, these developments affecting both active and passive funds are expected to increase the number of Chinese and international fund managers establishing funds in Ireland, according to Irish Funds.
Pat Lardner, chief executive of Irish Funds said market data suggests the country is already home to 4.9% of global fund assets and 14.6% of European fund assets.
The CAIA Association and SharingAlpha will run a fund selector’s asset allocation competition open to all investment professionals globally. Competitors will use their skill to construct a virtual fund of funds, starting February 1st 2017, and will be ranked based on their performance till November 31st 2017 (assessed as portfolio total return, minus maximum portfolio drawdown during the period).
The CAIA Association will offer scholarship awards of over US$5,000 to the podium winners, including a full scholarship to the CAIA Charter programme for the winner. Sign up on www.SharingAlpha.com by 31st January 2017.
Laura Merlini, MD EMEA of the CAIA Association said: “CAIA is very excited to support SharingAlpha in its mission to create a community of fund selection professionals. The CAIA Charter is the most relevant designation for asset allocators tasked with selecting and allocating to uncorrelated assets, and this competition will showcase that skill set. We wish the best of luck to all competitors”.
Oren Kaplan, CEO and co-founder of SharingAlpha, said: “Our vision is to offer the investment community a better way to select winning funds and at the same time to offer fund selectors and investment advisers the option of building their own proven long term track record. It’s about time that funds are rated on the basis of parameters that have been proven to work and fund selectors and investment advisers will be judged according to their ability to add value to investors. We strongly believe that the cooperation with the CAIA Association will help us in exposing a larger audience to our unique platform.”
Pixabay CC0 Public DomainAndrew Astley, courtesy photo. Andrew Astley to Join T. Rowe Price Group as Global Head of Product
T. Rowe Price Group has hired Andrew Astley as global head of product, effective January 23, 2017. In leading the global product group, Astley will collaborate with the firm’s investment and distribution teams to develop product strategies for U.S. Equity, Global/International Equity, Fixed Income, and Asset Allocation. He will also focus on developing and implementing plans for launching new products, ensuring that the firm’s existing range of strategies continue to meet the needs of clients and prospects, and delivering high-quality investment and product content.
Astley will be based in Baltimore and report to Robert Higginbotham, a member of the firm’s Management Committee.
Higginbotham said: “As we invest further in broadening our investment capabilities and distribution reach, combining strong management of our current and future product range with our outstanding investment performance and client service will enable us to continue meeting evolving client needs across channels and geographies. Introducing new investment strategies and vehicles is a key strategic initiative designed to help grow and further diversify our business. As we continue this build out, Andrew’s strong product and global experience built over 25 years in the investment industry will be a powerful asset to our clients and to our firm. We look forward to welcoming him in January 2017 as he takes on this very important role.”
Astley, said: “I look forward to working with the experienced and talented global product team at T. Rowe Price, and helping strengthen the firm’s long-term competitive position as a leading global active investment manager.”
Astley previously served as head of global product and marketing at State Street Global Advisors for eight years and was formerly the firm’s chief operating officer for EMEA based in London. A member of their executive leadership team, he most recently served as head of integration and transition during State Street’s acquisition of GE Asset Management. Prior to joining SSGA in 1997, Astley worked in a variety of client-facing roles at PanAgora Asset Management. He graduated from the University of Michigan with a B.A. in political science and has also earned the Chartered Financial Analyst designation.
Foto: Geralt. La mayoría de los inversores consideran razonables sus fees y no están preocupados de que los incentivos de ventas presenten un conflicto de interés
The FINRA Investor Education Foundation (FINRA Foundation) recently announced the results of its “Investors in the United States 2016” report. More than half of respondents (56 percent) report using a financial professional—such as a broker or advisor—primarily to improve investment performance (81 percent), avoid losses (78 percent) and learn about investments (63 percent). Survey results indicate that knowledge of investment concepts is low—particularly among women.
“On a 10-question investor literacy quiz, on average, men answered 4.9 questions correctly compared to 3.8 for women. Interestingly, both genders got the same number of questions wrong: 3.4,” said FINRA Foundation President Gerri Walsh. “But women were significantly more likely to say they did not know the answer to a question compared to men, perhaps pointing to differences in investor confidence by gender.”
Seventy-four percent of households surveyed report owning individual stocks and 64 percent report owning mutual funds. Individual bonds are held by 35 percent of the population and annuities by 33 percent. Fewer respondents report holding investments in exchange-traded Funds (22 percent), REITS, options, private placements, or structured notes (15 percent) and commodities or futures (12 percent).
The majority of investors (70 percent) feel that the fees they pay for their investment accounts are reasonable (5 to 7 on a 7-point scale). And fewer than half (43 percent) of investors who use a financial professional are worried that sales incentives present a conflict of interest.
Only 10 percent of the respondents who took a 10-question investor literacy quiz could answer eight or more questions correctly. The majority (56 percent) were able to answer fewer than half of the questions correctly.
Regarding generational differences the survey found that thirty-eight percent of investors between the ages of 18 and 34 have used “robo-advisors,” compared to only four percent for those ages 55 and over.
Crowdfunding remains a mystery to those ages 55 and up, as only 22 percent had heard of the concept. However, 58 percent of investors between the ages of 18 and 34 were aware of such investments.
A greater percentage (61 percent) of younger investors between the ages of 18 and 34 are worried about being victimized by investment fraud, compared to 28 percent of those ages 55 and older.
This Investor survey provides a detailed analysis of 2,000 survey respondents from across the United States who hold investments in non-retirement accounts. It is a new component of the FINRA Foundation’s National Financial Capability Study (NFCS), and one of the largest and most comprehensive financial capability studies in the country. In July 2015 (several weeks after the 2015 NFCS data had been collected), NFCS respondents who identified themselves as owning investments outside of retirement accounts were contacted and asked a battery of questions intended to provide the Foundation and researchers with a better understanding of how and why investors make investment decisions.
In a series of follow-up interviews, researchers explored topics such as investors’ relationships with financial professionals, understanding and perceptions of fees charged for investment services, usage of investment information sources, attitudes towards investing and investor literacy.
Economic fundamentals are looking better than the bearish consensus, says the Morgan Stanley Investment Management Global Fixed Income team. Yet, politics has been more disruptive to markets this year than expected and could get more fraught in 2017, with U.S. presidential and core European elections, Brexit negotiations and the Chinese politburo transition.
“We believe in this environment, riskier spread products could weather a gradual rise in risk-free rates, especially if it is supported by stabilizing or improving economic fundamentals. However, we are cognizant that, as psychological resistance levels get broached, rising yields could take on a life of their own. We have been reducing risk to help stay ahead of a possible bond tantrum and prefer spread exposures that are less correlated to interest-rate movement”, explains the team.
Subject to potential near-term event risks being resolved in the next few weeks, the Morgan Stanley Investment Management Global Fixed Income team remains optimistic about the prospects for emerging market fixed income for the remainder of the year as fundamentals, technicals and the macro environment remain supportive. China’s growth slowdown is likely to continue in the medium term, with short-term growth prospects reliant on continued fiscal and monetary policy support.
“We anticipate U.S. investment-grade (IG) credit will continue to outperform European IG, as the technical picture remains more supportive in the U.S. due to a more favorable yield environment. We maintain our constructive view on high yield as the global demand for yield continues to support this asset class in both the U.S. and Europe”, conludes the Morgan Stanley Investment Management Global Fixed Income team.
The views and opinions are those of the author as of the date of publication and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.
All information provided is for informational purposes only and should not be deemed as a recommendation. The information herein does not contend to address the financial objectives, situation or specific needs of any individual investor.
Any charts and graphs provided are for illustrative purposes only. Any performance quoted represents past performance. Past performance does not guarantee future results. All investments involve risks, including the possible loss of principal.
Prior to making any investment decision, investors should carefully review the strategy’s/product’s relevant offering document. For the complete content and important disclosures, refer to the link above.
Pixabay CC0 Public DomainPhoto: Zephylwer0. Allfunds Bank Starts its Asian Expansion
Allfunds, Europe’s largest fund platform, is launching its Asian operational hub in Singapore to service local business as well as those in Hong Kong and Taiwan. The Singapore branch will start its operations early next year. The hub will also pursue other opportunities across Asia.
Back in 2014, the company assigned David Pérez de Albéniz to investigate Asian markets. He has since been establishing the businesses infrastructure in the region.
Allfunds CEO, Juan Alcaraz, is confident that the time is right to press ahead with Allfunds’ expansion. Not only is the Allfunds platform business readily leveraged into new territories at relatively low cost, but there is growing demand from many wealth management distributors to streamline operational efficiency, focusing on asset servicing, data analytics and fund research, for potential outsourcing areas.
Also, Alcaraz said, the expanded distribution reach that Asia provides Allfunds’ existing asset management partners improves the potential for distribution of their funds.
“We have identified the key differences between the various countries and territories in Asia – as in Europe they are all different with different requirements. But having gone deeply into the needs of the funds industry in the area, it became very clear, that our highly efficient open architecture model would suit most of Asian markets, so we see no reason to limit our ambitions in the area,” Alcaraz said.
“Asia will massively contribute to the future definition of the global asset management industry due to its economic and demographic significance, and its accelerated digitalisation pace. China is, and definitely will be in the coming future, a significant contributor to these trends due to its relevance and magnitude in the global economy. We want to become global and entering Asian markets is a natural and resolute step for us,” he said.
Perez de Albéniz added: “Asian distributors have become increasingly interested in Allfunds for three reasons – because of the expertise gained from being at the heart of the mutual funds industry with a genuinely non-conflicted, open architecture model; because Allfunds’ holistic proposition comprises the widest range of fund processing, information provision and fund research activities currently available; and all can be offered through a single high quality provider at an outstanding competitive price.”
“Banks, insurance companies, asset managers and wealth managers in Asia are taking a very hard look at their bottom lines and how effectively they run their business. When talking to Allfunds they quickly realise that they can hand over mutual fund services to a business that has an institutional focus with a very extraordinary degree of specialisation – it is a powerful combination during these challenging times.”
Foto: geralt. Los grandes inversores institucionales prevén cambios en sus asignaciones, menos los estadounidenses que están a la espera
Institutional investors worldwide are expecting to make more asset allocation changes in the next one to two years than in 2012 and 2014, according to the new Fidelity Global Institutional Investor Survey.
The anticipated shifts are most remarkable with alternative investments, domestic fixed income, and cash. Globally, 72 percent of institutional investors say they will increase their allocation of illiquid alternatives in 2017 and 2018, with significant numbers as well for domestic fixed income (64 percent), cash (55 percent), and liquid alternatives (42 percent).
However, institutional investors in some regions are bucking the trend seen in other parts of the world. Many institutional investors in the U.S. are, on a relative basis, adopting a wait-and-see approach. For example, compared to 2012, the percentage of U.S. institutional investors expecting to move away from domestic equity has fallen significantly from 51 to 28 percent, while the number of respondents who expect to increase their allocation to the same asset class has only risen from 8 to 11 percent.
“With 2017 just around the corner, the asset allocation outlook for global institutional investors appears to be driven largely by the local economic realities and political uncertainties in which they’re operating,” said Scott E. Couto, president, Fidelity Institutional Asset Management.
“Institutions are increasingly managing their portfolios in a more dynamic manner, which means they are making more investment decisions today than they have in the past. In addition, the expectations of lower return and higher market volatility are driving more institutions into less commonly used assets, such as illiquid investments,” continued Couto. “For these reasons, organizations may find value in reexamining their investment decision-making process as there may be opportunities to bring more structure and accommodate the increased number of decisions, freeing up time for other areas of portfolio management and governance.”
Primary concerns for institutional investors
Overall, the top concerns for institutional investors are a low-return environment (28 percent) and market volatility (27 percent), with the survey showing that institutions are expressing more worry about capital markets than in previous years. In 2010, 25 percent of survey respondents cited a low-return environment as a concern and 22 percent cited market volatility.
“As the geopolitical and market environments evolve, institutional investors are increasingly expressing concern about how market returns and volatility will impact their portfolios,” said Derek Young, vice chairman of Fidelity Institutional Asset Management and president of Fidelity Global Asset Allocation. “Expectations that strengthening economies would build enough momentum to support higher interest rates and diminished volatility have not borne out, particularly in emerging Asia and Europe.”
Investment concerns also vary according to the institution type. Globally, sovereign wealth funds (46 percent), public sector pensions (31 percent), insurance companies (25 percent), and endowments and foundations (22 percent) are most worried about market volatility. However, a low-return environment is the top concern for private sector pensions (38 percent).
Now in its 14th year, the Fidelity Global Institutional Investor Survey is the world’s largest study of its kind examining the top-of-mind themes of institutional investors. Survey respondents included 933 institutions in 25 countries with $21 trillion in investable assets.
