Asset Managers in China Eye Investors from Europe
Assets managers from China have become interested in European investors and are looking to expand to target them. However, it won’t be easy for them to expand into foreign market and target them. The reason is the tough competition within European markets and the issue of distribution. Are the investors in Europe the right target for assets managers of China?
It is expected that more asset managers from China will internationalize and eventually target investors from Europe.
The trend shows that assets managers in China are launching alternative investments funds or UCITS (Undertakings for Collective Investment in Transferable Securities). They typically carry this out through their offices in Hong Kong.
By incepting UCITS-compliant fund that is domiciled in Ireland or Luxembourg, asset managers can access the market of Europe as many countries in the EU (European Union) are covered by it. Several asset managers have done just that to access investors in Europe.
Experts are expecting that more asset managers from China will bring China-focused funds to the investors in Europe. It is also expected that more alternative funds from China, especially infrastructure products, will be launched within Europe.
The $4 Trillion Market
It is important to note that tough competition will be faced by Asian managers in Europe. In Luxembourg, the UCITS market is over $4 trillion which means that it is a highly competitive market. The huge global players are already offering Asia-centered strategies like Chinese A-share funds. It will be extremely hard for Asian managers to compete against them
However, Asian managers can give a tough time to competitors by using their deep knowledge and understanding of regional and domestic markets. Why wouldn’t one want to invest their money in the asset managers within China that have more knowledge of the market and know it inside out?
Asian asset managers who plan to expand to Europe usually increase their regional and domestic capabilities first. For example, Value Partners, an asset management firm, first strengthened its Singapore-based investment team and then established a new office in the United Kingdom to get more coverage over global markets.
Another firm, Mirae Asset has set up their offices in 7 Asian countries in the last 13 years. Another challenge fund managers from Asia can face in Europe is distribution.
Jung Ho, CEO and President of Mirae Asset, said that it is difficult to distribute a product in the United Kingdom, even for a fund manager from Germany or France. Distributors are very picky about the products they include in their list and demand high quality.