Asian fund managers sidestep distributors in global expansion

27 June 2014   Category: News, Asia, China, Global, Hong Kong, United Kingdom   By Derek Au

Asian fund houses are increasingly setting up offices in Europe as a way of side-stepping the large costs associated with deploying third-party distributors to push their products into those markets.

During a breakfast seminar discussion on global distribution hosted on June 25 by the Association of the Luxembourg Fund Industry, Ashley Dale, chief marketing officer at Mirae Asset Global Investments (Hong Kong) Limited, said that the firm opened its London office a number of years ago as a way of building up its European distribution platform.

“We really look to the geographic distribution focus – so we have people who focus on German-speaking Europe, Scandinavia, France and the UK, [as well as] the Middle East, which at the time is being run out of London directly,” he explained.

However, Mr. Dale added that there are challenges associated with in-house product distribution. “I think one of the downsides of doing it alone, and not utilising sales platforms, is you are subject to internal staff turnover,” he said, adding that losing members of the sales force can lead to a drop in revenue – a challenge that Mirae has faced in the past.

CSOP Asset Management, the first Chinese offshore fund manager to provide products investing in the Mainland,  intends to set up offices in London and the US. Managing director, Helen Zhou, explained that the problems with deploying third party distributors included a lack of control and the requirement to share profits with partners. “Currently we focus on product launches, managing from Hong Kong and working with our partners,” she said.

A report by consultant McKinsey & Co published earlier this month showed that profit levels for asset managers operating in Europe rose 24% to 12.1 billion euros (US$16.48 billion) last year. However, they still remain approximately 6% below their 2007 peak, the McKinsey study found.