Exploring alternative distribution channels

07 April 2014   Category: News, Asia, China   By Asia Asset Management

Frustrated by the dominance of banks and securities houses across the distribution landscape in Asia, asset managers are increasingly looking to differentiate their mutual fund sales approaches.

Online money market fund platforms in China are a prominent example, and other alternative distribution channels include open-architecture direct sales platforms in Hong Kong, mobile phones in India, and working with regional banks in Japan.

Such distribution initiatives are in their early stages of development and should not cause sleepless nights yet for banks and securities firms. Still, Cerulli believes it takes courage to attempt something different in the asset management industry in Asia.

"It is an industry that is often viewed as stable and relatively unexciting, and one in which copycats abound, perhaps because of an unwillingness to embark on paths that are not tried and tested due to cost restraints or a lack of conviction on the part of management," says Chin Chin Quah, a senior analyst at Cerulli.

It is arguably tougher to find differentiation in distribution than in product. After all, fund houses understand that they are, first and foremost, product manufacturers, and where they add value is in managing assets and delivering superior performance.

"Fund houses shouldn't forget what their core competencies are. The challenge for them is to ally these competencies to a myriad of distribution possibilities. They should welcome new distribution ideas and ascertain which approach is best suited for their needs," notes Yoon Ng, Asia research director at Cerulli. "But once distribution approaches are chosen, managers have to be patient enough to wait for the rewards."