Investor take-up of foreign investment funds has significantly increased in Southeast Asia, despite a dramatic decline in overall mutual fund industry growth, according to a report into the region by Cerulli Associates.
Cerulli’s report entitled, Asset Management in Southeast Asia 2016, found that while year-on-year growth of mutual fund assets under management declined from 21.2% in 2012 to 6.4% in 2015, foreign equity fund assets in Thailand surged from THB111.1bn (US$3.1bn) in 2014 to THB226.2bn (US$6.4bn) in 2015.
In Malaysia, wholesale feeder assets also almost quadrupled from MYR812.5m (US$188.8m) in 2014 to MYR3.1 billion (US$770.6m) in 2015, and private unit trust foreign exposure increased from 14.9% to 16.8% over the same period.
“Despite these spectacular growth rates, assets of foreign-invested feeders in Thailand and Malaysia have largely been concentrated in the hands of the larger players or among the few biggest funds,” said Manuelita Contreras, an associate director at Cerulli, based in Singapore. The US$1.5bn feeder fund assets managed by J.P. Morgan Asset Management in Thailand and Malaysia, for example, mainly came from four of its funds: JPMorgan Global Healthcare fund, JPMorgan Global Income fund, JPMorgan ASEAN Equity Fund, and JPMorgan Asia Pacific Income fund.
Meanwhile, in the Philippines, Cerulli research pointed that 13 foreign-invested feeder funds and two funds of funds were launched, as at the end of 2015. The figures reflect activity since feeder fund unit investment trust funds were first introduced to the region in late 2013, while at least four Indonesian managers have launched foreign-invested Shariah-compliant funds as of April 2016.
“For foreign managers looking to engage third-party fund distributors in Southeast Asia, a long-term track record and global brand recognition will come in handy, though we understand that Thai managers are also open to appointing less well-known managers,” added Contreras.
“Southeast Asian managers also generally prefer to work with fund managers with an Asian presence and a shorter turnaround time.”