Need for Novel Ideas as Multi-Asset Gains Appeal in Asia

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Need for Novel Ideas as Multi-Asset Gains Appeal in Asia


Managers are starting to innovate as the space for income-oriented multi-asset funds becomes more crowded


June 2019, SINGAPORE - Asset managers in Asia are focusing on fixed-income and multi-asset strategies to meet investors’ needs for income and diversification. Dividend-yielding fund strategies and income-offering multi-asset funds feature prominently among managers’ product promotion plans for the next two years, according to Cerulli Associates' survey of managers conducted earlier this year.


The focus on multi-asset comes as little surprise as investors seek diversification and ways to weather market volatility in the midst of tough market conditions and trade tensions. In 2018, balanced funds were among the top asset classes by net flows in a few Asian markets. Net flows to these funds increased in Hong Kong, Taiwan, and Korea; in Singapore, they continued to receive robust interest.


The majority of asset managers Cerulli surveyed in Singapore, Hong Kong, Korea, and Taiwan expressed interest in promoting global multi-asset funds to distributors this year. Similar to asset managers, distributors see features such as regular and steady income payments, capital protection, and low volatility as most important to retail investors.


Cerulli expects asset managers to continue launching variations of multi-asset funds with income as a central theme. Income-offering multi-asset funds, which provide flexibility in offering both downside protection and capturing upside potential, will likely continue to be a key theme in key markets in the region. In order to generate income, managers will likely use various means, such as a combination of high-yield and mortgage-backed securities in fixed-income funds, or use alternatives in multi-asset products.


“As the multi-asset space becomes more crowded, asset managers will need to continuously strive to introduce differentiated product features to stand out and gain better chances of onboarding their products with key distribution channels,” says Leena Dagade, an associate director at Cerulli Associates. Some managers have already started to incorporate novel strategies within the multi-asset segment to differentiate themselves.


Building multi-asset businesses to offer tailored portfolio solutions to investors is also necessary for managers to meet specific investment goals and address the concerns of product pushing. As multi-asset continues to maintain its significance, managers must expand their investment teams and allocate more resources toward this asset class.

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NOTES TO EDITORS:
These findings and more are from: The Cerulli Edge—Asian Monthly Product Trends Edition, June 2019 Issue.

 

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