Global asset management industry assets under management (AUM) will reach US$106 trillion by 2019, with the non-US percentage share exceeding 50% at the close of 2015, according to the 14th iteration of Cerulli Associate's flagship report--Global Markets 2015: Key Insights into a Dynamic Landscape. However, managers need to be realistic about the efforts required to win business in high-growth markets.
2015 could be a good year for managers wishing to target Brazil. Positive regulatory changes and the establishment of a truly independent distribution network will further open the market to cross-border managers and fuel demand for global products. Managers should not be deceived by seemingly sparse opportunities elsewhere in Latin America. Chile's retail segment may look unappetizing because of its tiny asset base but it has great growth potential, while the fast-growing pension market in Mexico is looking increasingly attractive for cross-border managers.
As managers continue their distribution push into Europe, they would do well to keep the growth potential of some markets in perspective. In a Cerulli survey, Spain was cited by firms as a key target in 2015. "Cerulli believes that the market will continue to grow at a healthy pace, yet slower than the one seen over the past couple of years," said Barbara Wall, Europe research director at Cerulli. "Fund-of-funds vehicles are the cross-border asset managers' favorite point of entry and this segment is booming--total assets in 2014 grew more than 100% from €15 billion (US$18.2 billion) to €30.6 billion. What is also important is that the majority of these vehicles, 96%, are ex-house--they invest primarily in non-proprietary funds."
"China may be the jewel in the crown from a growth perspective, but regulation continues to favor local managers," said Ken F. Yap, director of global analytics at Cerulli. "With the local market firing on all cylinders appetite to invest overseas is minimal. There is also a wealth of private banking and insurance products that offer both liquidity and attractive returns. China is a long-term proposition, but one that cannot be ignored."
Taiwan has long been held as the most accessible market in the region with offshore assets increasingly overshadowing those onshore. Last year, offshore fund AUM grew by 21.8% led by bond funds. But there is a fly in the ointment. Managers may soon find their distribution costs rising. The Taiwanese authorities plan to make it mandatory for foreign managers to boost onshore business to obtain fund approvals.