Allianz GI flags Korea plans, waits on China

In terms of business development in Asia, Allianz Global Investors has not progressed as far as certain peers with plans for China, but sees Korean clients and Asian family offices as major growth opportunities.

Like other Western fund firms, it expects to boost the Asian proportion of its assets under management – currently around 10% of the global total of €316 billion ($421 billion), as of March 31.

Korea, where the firm offers both local and international funds, is one area of focus. Over the next two years, Allianz GI plans to bring in more global products on top of the 19 non-domestic funds it already offers there, says global chief executive Elizabeth Corley. She declines to give details of specific asset classes.

Allianz GI’s business in Korea is fairly evenly split between retail and institutional, and the $340 billion National Pension Service is its biggest client, Corley told AsianInvestor while in Hong Kong this month.

Elsewhere, while other Western asset managers are moving to expand their range of Hong Kong-domiciled products with a view to ultimately selling it into China, Allianz GI is more circumspect.

The German firm has no immediate plans to launch more Hong Kong-domiciled funds beyond what it had prior to the announcement of the China-Hong Kong mutual-recognition scheme in late January, says Corley.

“We see this as a good opportunity, but there’s so much regulatory change going on now – we want to see the landscape settle a bit,” she says. “We have no concrete plans we can talk about at this stage.”

The German firm does have a mainland joint venture, Guotai Junan Allianz Fund Management, but recent media reports have suggested the Chinese partner wants to sell its stake in the JV.

“We cannot comment for Guotai Junan,” says Douglas Eu, Asia-Pacific CEO at Allianz GI. He points out, however, that the joint venture celebrated its 10th anniversary in April and has recently appointed a new chairman. “Our recent conversations with Guotai Junan’s senior management have focused on how we can continue to build the JV on the back of stellar investment performance.”

In the meantime, Corley says she expects to see faster growth in Asia, both in terms of global products sold to Asian clients and Asian products bought by global clients. In terms of internal developments, Allianz GI has been building out its pan-Asian fixed income capabilities in Singapore over the past year following the appointment of David Tan.

Elsewhere in the region, the firm does not have markets such as Indonesia and Vietnam on its radar in terms of establishing a presence, says Corley, but over time she expects that to change.

It does invest in those markets, but not in less established frontier markets such as Bangladesh or Myanmar as yet. “We do our own research and need to have enough information available,” she explains.

Asked whether Allianz GI has been selling more funds via private banks, Corley says this has been a rising trend for a few years post-crisis due to growing individual wealth and clients seeking out more of an asset allocation approach as well as more diversification. They also have wanted simpler products, she adds, and they want to know there’s liquidity there if they need it.

Corley notes even the family office segment is making use of mutual funds, usually in niche, specialist asset classes, such as global small-cap and other high-alpha strategies. This is because it gives them more flexibility in their asset allocation – and is happening particularly in Europe, but also in Asia.

Some family offices are showing interest in Allianz GI’s infrastructure debt capabilities, following the firm’s hire of a team in that area last year, which Corley says reflects strong demand among institutions in Europe for this asset class.

Fund vehicles in the UK and Europe are being developed alongside separately managed accounts for the larger insurers and pension funds. There have been strong indications of interest, and the first investments, in the hundreds of millions of dollars, are being made on behalf of clients, she notes.

Allianz GI expects to close the first products in the first quarter of 2014, with more deal flow to follow. The investment focus for the asset class is on Europe now, but the firm may look to diversify, for example into Asia, says Corley, in light of the huge overall interest.