Asean, Chinese fund houses seen readying Ucits launches
A growing number of fund houses in Asia are preparing Ucits products with a view to selling them into both their home region and Europe, said Margaret Harwood-Jones, global head of securities services at Standard Chartered. She cited firms in China and Southeast Asia as particularly active on this front.
This reflects the growing international popularity and importance of the European Ucits structure, despite talk of it being at threat from moves to develop product passporting schemes in Asia.
Standard Chartered, which has a new platform whereby asset managers can rent Ucits investment vehicles under a broader umbrella, is seeing a rise in demand from local players to set up such products.
“We have a number of prospects, predominantly from the Asean countries, which are in different stages of launch,” Harwood-Jones told AsianInvestor. “The [Ucits] platform is already fully live operationally, and we plan to announce the client launches as soon as they are live.”
More Chinese asset managers – early adopters of the European wrapper in the region, with China AMC the first mover, in 2010 – are also looking at exporting their capabilities by launching Ucits funds. Standard Chartered is in discussion with six mainland firms, said Harwood-Jones, who is based in Singapore.
“If you test the maturity of Ucits against other passporting schemes in Asia, it’s fairly obvious which will be the winner,” she remarked. “Ucits is still the largest passporting brand.”
The structure is most prevalent in Singapore, but is also accepted in the likes of Hong Kong, Korea, Japan, Malaysia and Taiwan.
There are currently three programmes being developed in Asia: the Asean Collective Investment Scheme, the Apec project and Hong Kong-China mutual recognition of funds. The latter has so far attracted the most attention, but none are anywhere near as well established as Ucits.
Brexit effect?
Asked whether the fallout from Britain’s vote to leave the European Union has had a negative impact on demand for Ucits, Harwood-Jones said she had not seen that.
“The purpose of using the structure remains valid,” she noted. “Asset managers can use Ucits for distribution both in Europe and in several markets in Asia. They are looking to access the broader regional market here, not necessarily in Europe.”
Meanwhile, European and US managers are continuing to roll out Ucits vehicles in Asia. France’s Lyxor is planning a pan-Asia fund-of-funds product, while US-based Capital Group is readying a US investment-grade corporate bond fund.
However, Ucits is not the solution for everyone, conceded Harwood-Jones. “We’re still seeing strong appetite for managers that want to have local fund vehicles and local structures in-country.”
Singapore plans
For instance, Singapore is looking to develop the equivalent of UK open-ended investment companies (Oeics). There are a number of discussions under way, she noted, but the legislation won’t take hold until next year.
“Singapore has realised that rapid growth of wealth and private banking has to be taken to the next level by providing an ecosystem for local funds manufacturing,” said Harwood-Jones.
She added that the market expects the consultation on an Oeics equivalent framework to start by the end of March and that the structure would be available by the end of 2017.
The funds industry generally is growing in Asia partly because of the use of fund structures to support infrastructure projects, said Harwood-Jones. “Because of the real returns being provided by these funds, there is now a growing appetite in the traditional investor markets."