Fidelity outlines Southeast Asia expansion plans
Fidelity International is looking to expand its sales team in Singapore and will next month launch a Singapore dollar share class of its China Consumer Fund as the next steps in its business strategy in Southeast Asia.
The firm, the non-US arm of investment group Fidelity, launched the consumer fund in Hong Kong in February as a Sicav structure, allowing it to be marketed in Europe and selected countries in Asia. It invests in Greater China stocks that develop, manufacture or sell goods or services for Chinese consumers.
“This will be a key product for Fidelity this year, as we are launching it in multiple jurisdictions across Europe and Asia,” says Madeline Ho, Fidelity’s head of Singapore and Southeast Asia. Given its infancy, the fund has so far garnered “a decent level” of assets and delivered 9.2% between its launch on February 23 and May 31.
“We have now built a stable business in Singapore,” adds Ho. “The aim now is to strengthen our onshore business here by providing more coverage to distributors.” She wants to make more hires as soon as practicable, but declined to reveal any numbers.
Fidelity is also seeking new staff in Hong Kong, following the late-June departures of Carlo Venes, Damien Mooney and Sherry Wong. The firm plans to replace Mooney and Wong, although Venes’ responsibilities for running the institutional business now come under the remit of Mark Talbot, who started on June 27.
These moves follow several senior sales hires in Hong Kong in the past nine months, including Deborah Seto, KP Luk and, most recently, Larry Chen.
Meanwhile, Ho wants to see Fidelity boost its presence in Southeast Asia beyond the Lion City, through various means and subject to local regulatory frameworks.
However, she says, it makes sense to provide support from the Singapore office for the time being. Operating onshore in countries such as Indonesia, Malaysia and Thailand requires a local licence, which Fidelity doesn’t currently have. Moreover, those Southeast Asian markets are still developing and are likely to see a lot of changes in the coming years.
In the meantime, Fidelity supplies its funds and expertise via local asset managers through a feeder-fund structure to the domestic retail market and directly to institutional clients, where it is legally possible to do so.
For example, Bangkok-based Krung Thai Asset Management partnered with Fidelity in its response to an RFP for a $200 million global equities mandate issued earlier this year by Thailand’s Social Security Office. KTAM also offers retail funds managed by firms such as BlackRock and Fidelity.
“Launching feeder funds through local fund-management companies gives us an idea of how things work in that country; what the demand is like for Fidelity funds,” says Ho. “It also allows us to watch regulatory reforms and decide how best we can participate in each market.”
She says the main focus for the time being will be Malaysia and Thailand, as she sees these as the markets with the most potential in the Asean region. That’s perhaps not surprising, given that they have the largest pool of retail and institutional assets in Southeast Asia outside Singapore.
According to AsianInvestor’s latest list of the top 200 institutional investors in Asia ex-Japan by AUM (see the July issue of the magazine), Malaysia’s 10 biggest institutions share a total of $483.9 billion in AUM, while the figure for Thailand is $320.3 billion. These figures far outstrip those for Indonesia and the Philippines. The nine largest institutional investors in Singapore share an AUM of $1.03 trillion.
On the retail side, Fidelity emerged better off than many rivals from last year’s evaluation of funds under Singapore’s Central Provident Fund Investment Scheme (CPFIS). The process was aimed at improving the quality of funds offered under the CPFIS, and led to a significant reduction in the number of products on the platform.
Fidelity did see some of its funds removed from the list, but, says Ho: “We still have a good palette to offer investors and, through this process, we gain some market share in the CPF market.”
AsianInvestor magazine estimates put Fidelity as the second-largest independent fund manager active in Asia (after BlackRock), with $141 billion of regional assets under management as of late 2010, out of a global AUM of $1.5 trillion.