Following a year of stock market rallies, good returns on risk assets, and improving economic fundamentals, 2018 seems to herald good tidings for Asia’s fund management industry, in particular, according to Cerulli Associates, a global research and consulting firm.
With the global economy picking up speed, gains from stock market rallies in 2017 are expected to spill over into 2018. By the end of December 2017, the MSCI All Country Asia Pacific Index hit 28.7% in returns, outperforming the MSCI All Country World Index’s 21.6%. In Asia ex-Japan, Hong Kong dominates the region with 36.0% in returns as of December, followed by India (27.9%) and China (21.8%).
The IMF’s forecasts of 3.7% in global growth and 2.5% expansion in the United States, 6.4% in China, and 0.9% in Japan should bode well for the Asian fund management industry as they boost confidence in investors. Cerulli expects to see an increase in risk appetite in some markets, and more managers and distributors making a bigger push for equity funds than were seen in 2017.
In 2017, there was a preference for bonds in a number of Asian markets outside Japan, as well as in Australia, despite efforts by distributors in markets such as Singapore and Hong Kong to promote equity funds to investors. Across Asia (excluding Japan) bond funds recorded the second-strongest net new flows at $49 bn after money market funds, and the third-largest assets under management at $699.7 bn after money market and balanced funds, as of September 2017.