April 2, 2012
Nomura Research Institute, Ltd.
Nomura Research Institute (NRI), Ltd., a leading provider of consulting services and system solutions, in partnership with Strategic Insight, today announced the release of a whitepaper examining the Asian fund industry. With an exploding middle class, from 450 million people today to about 2 billion in the next 10-15 years, Asia is the fastest-growing region internationally, set to surpass the US and Europe in overall assets by 2025. According to the findings, this growth creates a significant opportunity for fund managers globally. However, the complexities of distributing funds in this region's fragmented industry remains enormous, especially as investors concentrate and entrust their financial assets to a smaller number of leading providers.
Around the world, close to 95% of all flows (excluding money markets) went to one-half of one percent of all registered products available in 2010. In 2011, an even greater concentration, equaling 0.3%, of the products have gathered the equivalent of 100% of industry cash flows worldwide. This is known as a blockbuster effect.
"The evolving phenomenon of a limited amount of flagship fund blockbusters is capturing an increasing proportion of industry flows and has a huge impact on the operations and success of asset managers," said Sadayuki Horie, Senior Researcher at NRI.
Of the over $2 trillion total in local and cross-border fund assets across Asia, Japan accounts for nearly $0.7 trillion, with a non-domestic investment bias. Next in line are China ($0.4 trillion), Korea ($0.2 trillion), and India ($0.15 trillion), which have much more of a domestic focus. Cross-border UCITS-dominated Hong Kong, Singapore, and Taiwan combined hold $0.5 trillion in assets.
"The increasing prevalence of international money managers in Asia and products with a distinct international investing orientation make it a complex global and local business," said Daniel Enskat, head of global consulting, Strategic Insight.
According to the survey, distribution success factors in the region are tethered to a combination of important decision making criteria, most notably the firm's organizational stability, global expertise and consistency.
"Asset holders in Asia are increasingly looking for strong brands to help them shape their views on metatrends, educate investors, inform regulators, and help defend and expand the industry," continued Enskat.
This paper was prepared by Strategic Insight's Daniel Enskat, head of global consulting, and Jag Alexeyev, head of global research, with contributions by the firm's senior analysts, including Bryan Liu and Lise Carpenter. The research also includes analysis from the Nomura Research Institute provided by Hisashi Kaneko and Sadayuki Horie, senior researchers focusing on asset management and fund distribution in Japan.
Nomura Research Institute, Ltd. (NRI) is an independent, global IT solutions and consulting services provider with annual sales of 326.3 billion yen as of FY ended March 2011. With front-to-back support for the buy- and sell-side, NRI's tradition of innovation has positioned them as a trusted international market leader. Leveraging NRI's global consulting business NRI is able to provide innovative financial IT solutions for investment banks, asset managers, banks and insurance providers. For more information, visit www.nri.com.
For more than 25 years, Strategic Insight (SI) has anchored competitive research and business intelligence at the heart of the mutual fund industry, now nearly $30 trillion worldwide. Our core mission remains strengthening the mutual fund industry overall, and helping each of our clients succeed in the global marketplace. We accomplish this through our linked suite of Simfund databases, in-depth studies, Internet libraries, and on-demand research, enriched with personalized advice. SI clients are responsible for 90% of US fund industry assets, and include executives among more than 200 investment management and insurance companies, distributors, investment banks, hedge funds, consultants, law firms, associations, regulators, and other industry participants. In the US and internationally, SI's expanding global research is shared with more than 50 of the world's largest and most dynamic investment and distribution firms.
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