Malaysian asset managers predict that a shift in investor preferences, notably to responsible investments, will be the most important external change the industry faces within the next two years, according to new survey findings by a think-tank of the country’s securities regulator.
Some 77% of managers expect investors to shift to socially responsible investing funds, while only 51% see a move towards exchange-traded funds.
The Institute for Capital Market Research Malaysia (ICMR), an independent think-tank established by the Securities Commission Malaysia, polled all 75 local asset managers in Malaysia including bank/insurance backed, foreign, Islamic, and standalone asset managers, through an online survey comprised of 21 questions between September and October last year.
Surveyed respondents represent 78% of the total assets under management (AUM) in Malaysia’s fund management industry in 2017, and within each subgroup, the research verified that respondents represented more than 70% of the AUM within that strata. The survey was conducted jointly with the Nomura Institute of Capital Markets Research, a unit of Japan’s Nomura Holdings.
In addition to the survey, the ICMR also conducted eight focus group dialogue sessions with 21 C-suite level personnel from licensed asset management companies between July and August last year, as well as interviews with key institutions, namely the Employees Provident Fund (EPF), Kumpulan Wang Persaraan Diperbadankan (KWAP), and Permodalan Nasional Berhad (PNB).
Some 94% say changing investor preferences is the “most critical external shift affecting the fund management industry” over the next 12 to 24 months, according to the survey report released on June 20.
Other key external factors are changes in regulatory requirements, and macroeconomic and market conditions, cited by 89% of respondents.
"In line with their views on the key external shifts in the next 12 to 24 months, it is not surprising that the bulk of asset managers highlighted that their top strategies in the coming five years will be customer-centric," the report says.
In terms of asset classes, 86% of managers anticipate demand for regional stocks, 83% for foreign stocks, and 83% for alternative or non-mainstream investments.
Two-thirds of managers say one of their top priorities over the next five years is to expand their customer base, while 46% cite expansion of sales and distribution networks as a key priority.