Hong Kong to see more small players grabbing the wealth management cake
London-listed boutique fund manager Jupiter Asset Management expects HK to provide sustainable growth opportunities
Competition is set to heat up in Hong Kong’s wealth management sector as a growing number of boutique fund houses and independent wealth managers are eyeing Asia for sustained growth opportunities.
London-listed Jupiter Asset Management, which entered the Hong Kong market three years ago and has 18 funds in the city, is now looking to move beyond private banks to retail clients in the city.
“Our UK business is growing at a single digit growth rate, in Europe it is double digit, while in Asia, it is triple digit [due to the small base],” Jupiter’s global head of distribution Nick Ring said, in terms of the compound annual growth rate of capital flows.
Jupiter will launch an Asia Income Fund by the end of this month and plans to seek approval for an unconstrained equity product in Hong Kong that will target the global emerging markets so that it can keep pace with diverse needs of local investors, said Ring.
“People are frightened by the volatility of the markets. They want secured income and a diversified strategy that offers protection,” said Peter W Swarbreck, head of the Asia-Pacific business at Jupiter. Swarbreck, however, said that despite the bias towards local stocks, investors are now ready to broaden the horizon for asset allocation.
His comments come at a time when global investor sentiment has turned distinctly bearish amid lingering concerns about the Brexit fallout and uncertainties about US presidential elections and interest rate hikes. The British will decide whether to leave the European Union at a referendum on Thursday.
The risk-averse sentiment has pushed up the Japanese yen and gold prices to near two-year highs last week due to their safe-haven perception, while exchange traded funds (ETFs), which passively track benchmarks of a region or theme, are attracting capital inflows.
Ring said Jupiter will continue to follow an active investment strategy for gains amid market volatility with a special focus on niche segments like investors seeking extra returns.
Jupiter, which has a track record of over 31 years and about US$52 billion worth of assets under management, relies on its 61 managers who actively shift asset allocations in response to market changes and are not constrained by any house view or movement of benchmarks.
Even as small asset managers are looking to expand in HK, external asset managers (EAMs) are also grabbing a slice of the wealth management pie in the city. External asset managers are independent financial intermediaries who offer investment advise to high net-worth clients.
“I expect EAM-managed assets to at least double in the next three to five years, and then to potentially grow even further, depending on how local regulations evolve,” Stefano Veri, the global head of financial intermediary business at UBS said.
In a study by UBS on EAMs in Hong Kong and Singapore, two third of the respondents estimated EAMs only manage up to 10 per cent of the assets under their jurisdiction. About 90 per cent of respondents expect asset growth in the next three to five years, while 80 per cent see an increase in the number of EAMs.
“Most of the EAMs in the city were launched just 12 to 24 months ago and are therefore still quite small...nevertheless we envision a lot of growth in the Hong Kong EAM space,” Jessica Cutrera, managing director at EXS Capital said.