If Australian fund managers want to be taken seriously in Asia they must establish a distribution presence in the region, says Perpetual.
Despite the progress being made on the Asia Region Funds Passport and accompanying regulatory/tax settings, more needs to be done to promote the export of Australian financial services to Asia.
Perpetual and the Financial Services Council released their fifth Australian Investment Managers Cross-Border Flows Report yesterday.
The report found that between 1 January 2010 and 31 December 2015, investment by foreign investors into Australia through Australian-domiciled investment managers more than doubled from $20.3 billion to $46 billion, growing at a compound rate of 17.8 per cent per annum.
Speaking at the launch of the report, Perpetual general manager for managed funds services Andrew Cannane warned fund managers not to discount distribution in their expansion plans.
“You can have all of the returns in the world, but you need to be seeing both the gatekeepers and the end investors [in Asian financial hubs],” Mr Cannane said.
“There’s nothing quite like wearing out the shoe leather.”
Even with the government's planned launch of corporate collective investment vehicles in July 2017, Australian companies still need to have distribution, he said.
Australian firms like IFM Investors are leading the way by opening up offices “all over the world”, Mr Cannane said. IFM Investors announced the opening of a Hong Kong office last week.
Nikko Asset Management managing director Sam Hallinan, who also spoke at the launch of the report, went further and said fund managers are “wasting their time” unless they have representatives on the ground in Asia.
“The notion of fly-in fly-out just doesn’t work. You really do need to demonstrate commitment … particularly with a country like Japan,” he said.
Partnering with a local fund manager, as Tyndall AM did with Nikko AM, can work just as well as opening offices in Asia, Mr Hallinan said.
“[Japanese investment managers] really do take a long time to make a decision on who they partner with. But once they make that decision they partner hard,” he said.
Mr Hallinan cautioned Australian investment managers against relying on the successful establishment of the Asia Region Funds Passport or the removal of withholding tax as their ‘ticket’ into Asia.
“The rivers of gold will not happen when the passport is legislated. The rivers of gold won’t happen when the withholding tax is eliminated or reduced. They’re just roadblocks,” Mr Hallinan said.
“If you really want to have [Asia] as part of your strategic future, you have to do it now.”