Fund houses target retail investors over HNWIs

23 May 2014   Category: News, Asia, Global   By Derek Au

Mass retail investors have overtaken high-net-worth investors (HNWIs) at the top of the list of client segments that Asian fund houses are keenest to tap, according to a survey.

The research, conducted by Cerulli Associates in March this year, found that mass retail investors scored highest on the agendas of firms in Taiwan, India and China. HNWIs, which had been the top priority over the past few years, were ranked second or third on the priority list of managers in Singapore, Taiwan, India, Korea and China.

Cerulli said that retail investors had drawn a greater focus because previously low-hanging fruits, such as private banks, had become harder to access, prompting asset managers to turn to mass-market clients.

However, the survey also warned managers that the cost of attracting this client segment was high and the returns were often only long-term.

Responding to the survey results, Terry Pan, head of Hong Kong business at JP Morgan Asset Management, was sceptical over whether retail investors would overtake HNWIs. “When you look at the growth of Asian economies, I agree more and more investors from the middle-class are increasingly interested in investment products. However, would retail investors replace high-net-worth or ultra-net-worth investors? I think they won’t. The scale of these investors is not big enough for issuers to launch specific products for them. However, retail investors will be more prominent in issuers’ consideration,” he told Asia Asset Management.

He added more than half of JP Morgan’s fund business in Asia presently comes from retail investors, and expects that this trend will continue in the future.