Announcing 2015 Greenwich Quality Leaders in Asian Institutional Investment Management
Asset management companies continue to enter the Asian market to fight for a share of the region’s fast-growing pool of institutional investment assets. Most of these new entrants are focusing their efforts almost exclusively on the handful of massive Asian institutions that control the vast bulk of these assets.
Asian institutions currently control about $11–12 trillion in assets. While most of that money is managed in-house, about $1.9 trillion is open to external asset managers—an increase of over 20% from 2014. Greenwich Associates expects the pool of externally managed assets to continue growing at a steady pace, as institutions in Asia diversify investment portfolios.
About 90% of these assets are held by about 25 institutions. As a result, most Western asset managers target a group of 30–40 institutions from offices in Hong Kong and Singapore. The arrival of new asset management companies in this concentrated market has created intense competition for assets. As recently as five years ago, the firms that succeeded in this tough environment were generally large organizations with high levels of brand recognition.
More recently, however, Asian institutions have been diversifying, adding strategies like credit, high yield and regional equities to portfolios previously dominated by domestic fixed income and global equities and fixed income. As they do so, they are becoming more open to managers with strong track records and the ability to explain how they create value—even if their investment committees aren’t familiar with the brand name.
Most of the firms on the list of 2015 Greenwich Quality Leaders in Asian Investment Management Service are trying to build a strong presence in Asia by forging relationships with the region’s giant institutions as well as smaller institutions outside the major financial centers. “Firms like Allianz Global Investors, BlackRock, Franklin Templeton, and J.P. Morgan Asset Management are demonstrating their commitment to local Asian markets by putting people on the ground to service local institutions,” says Greenwich Associates consultant Abhi Shroff. “This commitment is reflected in high scores for these managers on the Greenwich Quality Index.”
These firms are capitalizing on the fact that institutional use of investment consultants remains low in Asia. Only 22% of Asian institutions use consultants for portfolio decisions and manager selection, as opposed to the 80–90% usage levels seen in the United States, United Kingdom and Australia.
About two-thirds of Asian institutions say they value and would like to see improvement in managers’ ability to provide advice on their broad portfolios. “That demand didn’t exist just a few years ago, but now Asian institutions are asking their asset managers for help—giving those managers capable of providing good advice a chance to win new clients and deepen existing relationships,” says Jivan Sidhu.