The volume of Asian institutional assets accessible to external managers is expected to rise by $700 billion by 2016 according to Boston-based Cerulli Associates. However managers face greater hurdles securing mandates and a profitability squeeze from the Asian institutional client segment. Zero management fees are increasingly appearing in the markets of China, South Korea and Thailand rather than the typical 2% management fee and 20% performance fee structure due to increasing competition over mandates. AFM's view has always been that if performance is good enough fees should not be a deterrent to investment, rather if performance has been insufficient investors should redeem and reinvest with better performing managers.
The growth in Asian institutional assets is set to be mirrored in Australia with Superannuation funds to reach $3.5 trillion by 2025 and possibly $7-8 trillion by 2035 according to The Hon. Nick Sherry (former Assistant Treasurer now a consultant at Ernst & Young). The growth in Superannuation assets is likely to result in increasing offshore investment as local investment opportunities are insufficient to handle the increasing Superannuation pool.
Read the entire article here. by Rita Raagas De Ramos, Financial Times.
