ING Investment goes bottom-up in South Asia
The firm is among the few international fund management companies aggressively building its business in South Asia, which so far makes up about 12% of its $115 billion in Asian AUM.
Mike Ferrer, regional general manager for South Asia at ING Investment Management (ING IM), is responsible for the firmÆs businesses in India, Thailand, Malaysia, Singapore, the Philippines and Dubai. The firmÆs CEOs in those markets are fully empowered to manage the day-to-day operations of the business and are responsible for executing the business plans. But Ferrer, who is based in Hong Kong, works very closely with the CEOs on a strategic level by identifying and developing objectives, market positioning and overall business plans. He spoke to AsianInvestor about where ING IM stands in those markets in terms of business development.
What is South AsiaÆs contribution to ING IMÆs total assets under management (AUM)?
Ferrer: ING IM worldwide had an AUM of approximately $549 billion as of the third quarter of 2007, of which Asia-Pacific accounted for $115 billion and South Asia accounted for $13.7 billion.
How does ING IM approach each of the South Asian markets in terms of building the local business, managing funds and undertaking sales and distribution?
We believe it is necessary to be on the ground and close to our clients and distributors in order to really meet their needs. In any of the markets that we decided to enter, ING IMÆs approach has been to build a complete business bottom-up, leveraging on our global capabilities and regional strengths. This means building the full set of competencies on-the-ground from investment management capabilities, sales and marketing, client servicing, and product development, to the necessary middle and back office functions. We ensure that our processes in each local business, whether in the investment area or in other areas, adhere to global standards.
Among the South Asian markets, where has ING IM achieved the most success?
In each market, ING IMÆs aim is to be a market leader over the medium-term. ING IM ranks in the top 10 player in six out of the 12 markets in Asia in terms of assets under management, and this includes businesses in South Asia like Thailand and the Philippines where we occupy top five positions. In Malaysia, ING Funds Berhad, a business which was started barely three years ago, has quickly become a top 10 player in the market and the market leader in global and Islamic products.
Which South Asia markets are the most challenging?
Each market presents its own unique challenges, some of which are related to the macro and political environment, while others have more to do with the business practices and industry structure. I would also say that the markets with the greatest opportunities also present the biggest challenges.
In South Asia, India provides the greatest opportunities in terms of the potential to grow assets, driven by the powerful demographic and economic forces. Last year alone, the industry grew by more than 92% in terms of asset under management crossing the $100 billion mark. However, to be successful in India, you need to establish presences not just in the top eight cities like Mumbai and Delhi, but more and more across the country in order to tap the real potential.
The stigma of political instability is still attached to markets such as Thailand and the Philippines. How much of that is perception and how much of that is a real problem that affects portfolio investment opportunities in those markets?
Undoubtedly, political instability negatively impacts investor confidence and the Philippines and Thailand are currently the most sensitive to local political factors among South Asia countries. However, each country continues to make progress in terms of the economic fundamentals which ultimately drive markets. The Philippine economy grew by around 6.9% last year while, in Thailand, the elections brought back some normalcy and reduced the uncertainty level. Not surprisingly, the equities markets in both countries performed well last year. From a business standpoint, we remain optimistic.
What is your overall outlook for South Asian markets this coming year? Do you expect any particular market to stand out, and in which case, do you expect to devote more of the companyÆs resources and efforts into that market?
We expect last yearÆs volatility in the financial markets to continue through to this year and we are seeing some of this early on. Despite this, we remain optimistic about the prospects in the asset management industry across South Asia because the underlying fundamentals for economic growth remain intact.
Asian economies are still relatively unaffected by the subprime crisis and the wealth creation we are seeing all over Asia will continue to drive asset growth. Another driver is the current low mutual fund penetration in most markets.
What are ING Investment managementÆs expansion plans in South Asia in the near-term and over the coming years?
We are aggressively expanding our business by bringing in a variety of additional global products and tailoring them to suit respective local requirements. We also continue to expand our local investment management, product development capabilities as well as distribution infrastructure. Additionally, we continuously evaluate potential entry into newer markets and would be keen to enter new markets depending on its overall attractiveness to ING based on different parameters.
What is South AsiaÆs contribution to ING IMÆs total assets under management (AUM)?
Ferrer: ING IM worldwide had an AUM of approximately $549 billion as of the third quarter of 2007, of which Asia-Pacific accounted for $115 billion and South Asia accounted for $13.7 billion.
How does ING IM approach each of the South Asian markets in terms of building the local business, managing funds and undertaking sales and distribution?
We believe it is necessary to be on the ground and close to our clients and distributors in order to really meet their needs. In any of the markets that we decided to enter, ING IMÆs approach has been to build a complete business bottom-up, leveraging on our global capabilities and regional strengths. This means building the full set of competencies on-the-ground from investment management capabilities, sales and marketing, client servicing, and product development, to the necessary middle and back office functions. We ensure that our processes in each local business, whether in the investment area or in other areas, adhere to global standards.
Among the South Asian markets, where has ING IM achieved the most success?
In each market, ING IMÆs aim is to be a market leader over the medium-term. ING IM ranks in the top 10 player in six out of the 12 markets in Asia in terms of assets under management, and this includes businesses in South Asia like Thailand and the Philippines where we occupy top five positions. In Malaysia, ING Funds Berhad, a business which was started barely three years ago, has quickly become a top 10 player in the market and the market leader in global and Islamic products.
Which South Asia markets are the most challenging?
Each market presents its own unique challenges, some of which are related to the macro and political environment, while others have more to do with the business practices and industry structure. I would also say that the markets with the greatest opportunities also present the biggest challenges.
In South Asia, India provides the greatest opportunities in terms of the potential to grow assets, driven by the powerful demographic and economic forces. Last year alone, the industry grew by more than 92% in terms of asset under management crossing the $100 billion mark. However, to be successful in India, you need to establish presences not just in the top eight cities like Mumbai and Delhi, but more and more across the country in order to tap the real potential.
The stigma of political instability is still attached to markets such as Thailand and the Philippines. How much of that is perception and how much of that is a real problem that affects portfolio investment opportunities in those markets?
Undoubtedly, political instability negatively impacts investor confidence and the Philippines and Thailand are currently the most sensitive to local political factors among South Asia countries. However, each country continues to make progress in terms of the economic fundamentals which ultimately drive markets. The Philippine economy grew by around 6.9% last year while, in Thailand, the elections brought back some normalcy and reduced the uncertainty level. Not surprisingly, the equities markets in both countries performed well last year. From a business standpoint, we remain optimistic.
What is your overall outlook for South Asian markets this coming year? Do you expect any particular market to stand out, and in which case, do you expect to devote more of the companyÆs resources and efforts into that market?
We expect last yearÆs volatility in the financial markets to continue through to this year and we are seeing some of this early on. Despite this, we remain optimistic about the prospects in the asset management industry across South Asia because the underlying fundamentals for economic growth remain intact.
Asian economies are still relatively unaffected by the subprime crisis and the wealth creation we are seeing all over Asia will continue to drive asset growth. Another driver is the current low mutual fund penetration in most markets.
What are ING Investment managementÆs expansion plans in South Asia in the near-term and over the coming years?
We are aggressively expanding our business by bringing in a variety of additional global products and tailoring them to suit respective local requirements. We also continue to expand our local investment management, product development capabilities as well as distribution infrastructure. Additionally, we continuously evaluate potential entry into newer markets and would be keen to enter new markets depending on its overall attractiveness to ING based on different parameters.
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