Asia mutual fund assets to touch $1.1trn

Asia ex-Japan's mutual fund assets are set to reach more than $1.1 trillion (Dh4.04trn) by the end of 2010, exceeding their 2007 all-time peak.

This region leads the global recovery, according to the latest issue of the Cerulli Edge — Asia-Pacific Edition, a quarterly publication dedicated to this region.

The rise would represent a rally of more than 54 per cent from 2008 levels – a year when the swinging impact of the global financial meltdown wiped $350 billion off Asia ex-Japan's mutual fund assets.

The recovery in 2009 was due largely to rapidly rising stock markets rather than improved net new investment, but if asset markets remain stable, investor flows are expected to improve during 2010. "It would be wrong to gloss over the crisis-induced 2008 bust too lightly," said Sunil Jagtiani, associate director at Cerulli Associates.

"It was undoubtedly a uniquely painful event. In Asia, it is definitely time to look forward, not back. We expect Asia's asset management industry to make up the ground lost in the financial crisis more quickly than many other parts of the world," he said in a statement released yesterday.

The latest issue of the publication forecasted that Asia ex-Japan is set to surpass its 2007 peak level of mutual fund assets in 2010 as the region leads the global economic recovery, with flows set to improve if markets stay stable.

The findings show that China continues to have the region's biggest mutual fund market, but its lead over its nearest rivals has been drastically cut by the financial crisis, indicating a more balanced opportunity set.

Institutional business is growing in significance, with some firms tilting resources and manpower to better serve the sector, thereby building a more balanced asset management business.

One of the consequences of the financial crisis is that the opportunities across the key mutual fund markets in Asia ex-Japan are better balanced. In 2007, China's mutual fund assets were double that of its nearest rival, South Korea. They were also 334 per cent larger than India's and 305 per cent larger than Taiwan's.

But these percentages changed drastically in 2009. China's mutual fund assets were 28 per cent bigger than South Korea's, 140 per cent larger than India's and 235 per cent greater than Taiwan's. This change was due to a few possible factors, according to the report. The rival nations to China lost less assets, recovered more strongly, or experienced a combination of both.

Global managers would do well to consider this change carefully, and note that institutional asset gathering opportunities are also increasing in the Asia ex-Japan sector, such as in the pension sector.

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