Firms head East in search of rising wealth and markets
These days, all roads for European fund managers and allocators seem to lead to Asia. But when they arrive, it is clear some of them struggle with ‘what now?’.
Investor appetite may be very different to Europeans, the languages may be a barrier to client servicing and investing, and local know-how is definitely required for investing there. In treading its own path to Asia’s $6.5trn wealth market, EFG Asset Management (EFGAM) has enjoyed a key advantage over many rivals.
Its private bank parent EFG has been there since 2000 and was one of the first Swiss financial groups to build its Asian footprint. EFG has built its team in Hong Kong and Singapore to 400, and it runs $14bn from the region.
Moz Afzal, CIO of EFGAM, explains: “It was always strategically imperative for the bank to have a presence in Asia, which is one of the fastest growing wealth management markets – and now also the most competitive.”
Meanwhile, EFGAM grew its own staff in Hong Kong and Singapore to 14 over the past 18 months. It serves EFG Private Bank’s clients with discretionary and bespoke investments selected on an open-architecture basis, and it also serves nstitutional clients At present, $450m of EFGAM’s total $7bn client assets come from Asia. But Afzal says over the coming five years Asian client money, as well as that of Latin America, could total more than the assets from Europe, which is currently EFGAM’s largest pool.
More generally, he expects Switzerland’s asset and wealth managers to benefit from their reputation of helping wealthy clients at home – but they will face hard competition.
“Wealth created in Asia is growing at an extraordinary pace. But does that go to sensible Swiss-style banks, or to local players? That is unknown. If you go to China, they will buy LVMH and Burberry goods, but will that translate to Swiss private banks as well? Only if you have good wealth managers and expertise in servicing.”
EFGAM is positioning itself in the region by launching locally focused products, hiring more local staff, and by gaining a full licence in Singapore allowing it to offer discretionary portfolio management from the private banking business there, as well as its Ucits New Capital funds to professional clients.
Afzal says: “Our management focus is very much on trying to capture the emerging market wealth developing in Latin America and Asia. “We have tried to address Asia first, but in the next 12 months we will start turning our attention to Latin America.”