Manulife plans HK funds platform for mutual recognition
Manulife Asset Management intends to build a Hong Kong funds platform to tap the “formidable” opportunity presented by the upcoming mutual recognition scheme.
Funds domiciled in the city are likely to have an income and multi-asset theme, the firm’s regional CEO has hinted.
And Manulife AM is expected to soon be announcing hires as part of the integration of its wealth and asset management business units.
Michael Dommermuth, head of wealth and asset management for Asia at Manulife, said that the launch of Hong Kong-China mutual recognition on July 1 had created the need for a local platform.
Mutual recognition will require participating funds to be domiciled in Hong Kong and have a track record of at least one year.
“Today, we do not have a Hong Kong-based fund platform,” Dommermuth said. “We operate ILP [investment-linked product], MPF [Mandatory Provident Fund], and Ucits platforms. In order to tap the formidable opportunity that is the mutual recognition scheme, we need to establish a Hong Kong platform.”
When asked why Manulife hadn’t launched Hong Kong-domiciled funds before, Dommermuth said the firm didn’t have to in the past.
“We are a pan-regional player and the Ucits platform provided us the opportunity to build scale in ways not possible with a Hong Kong platform,” he said. “But the world has changed a lot for us.”
Dommermuth said most of Manulife’s activities in Asia have been local market-based, which is where it sees growing sales and its business gaining scale.
“Ucits makes less sense to us and local platform makes a lot of sense. We see huge opportunities in mutual recognition that warrant us a look at how we establish our product and how we position our product in Hong Kong,” he noted.
Dommermuth declined to provide more details about Manulife’s strategy around mutual recognition but hinted that any fund launch would have an income and multi-asset theme.
Income funds have been the top-selling products in Hong Kong. Manulife has also been touting multi-asset products as the way to go if investors are coming out of cash. A recent Manulife survey revealed that cashed-up investors face a tough retirement and encouraged investors to move out of cash.
Meanwhile, Dommermuth suggested that there will be additional hires at the firm as part of the process of integrating its wealth and asset management business units. Manulife merged its wealth and asset management businesses earlier this year, reflecting a trend in the industry, and appointed Dommermuth as head of the combined firm.
He declined to say what positions will be filled but said there would be announcements to be made soon.
“Now increasingly you will see us operate on the mutual fund front. Historically we are a major player in Indonesia. We are operating in Japan and China. We will increase [our fund business] in the region so customers have a choice,” he added.
“What we are doing with this merged asset and wealth entity is we are organising ourselves around the basic proposition that people need to come out of cash and into the three vehicles: pension, funds and insurance.”
Manulife has approximately 100 investment professionals across 10 markets in Asia - Hong Kong, Japan, Taiwan, China, Singapore, Indonesia, Malaysia, Thailand, Vietnam and the Philippines.
The firm had a total of $320 billion of assets under management globally, of which Asia's AUM was $67 billion, as of the end of March 2015.
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