JP Morgan AM in Singapore retail buildout
Having set up its onshore retail business in Singapore in September 2010, JP Morgan Asset Management plans to register more funds in the next quarter with a focus on multi-asset income.
The firm is also working on strengthening its distribution relationships with retail banks, private banks and insurance companies and broadening the range of distributors in the Lion City, says Andrew Creber, head of the Singapore business.
JP Morgan AM splits distributors into four channels – retail and private banks, IFAs and insurers – with the first three being the initial focus of the business when it was established, he adds.
The fund house sells wrapped products through the main insurance players in Singapore and is continuing to build out its product range. It is increasingly turning its attention to IFAs and familiarising them with its funds.
JP Morgan AM had 21 registered funds available to Singapore retail investors in August 2010, at which point it could only offer them to professional investors such as private banks. After September that year it could offer them to retail investors and has since expanded its range to 34 registered funds.
In terms of types of funds, Creber says income and multi-asset themes – which took off across Asia last year, having spread from Japan – remain a major focus (see associated story today). Clients are still looking for capital preservation, he adds, and the firm is keen to work with partners to promote such products.
The demand for income-type products has concentrated on fixed income, but clients are increasingly realising there is also strong, stable income available from mature equity securities, says Creber. Hence the firm is looking to expand its product focus beyond traditional fixed-income products to multi-asset, income-orientated products.
Asset managers and distributors will be hoping that fund volumes rise in Singapore following a poor first quarter. Non-Central Provident Fund unit trusts registered for sale in the city state, in aggregate, registered a net inflow of S$88 million for the first quarter of 2012, compared with S$2.5 billion for full year 2011.
“Our distributors are keen to increase flow into mutual funds,” says Creber, “and have been surprised by the lack of traction this year.
“Most investors were caught by surprise by the equity rally early this year, didn’t really participate and now markets have come off,” he notes. “Given the continued uncertain macroeconomic backdrop, industry flows have been down. However, we are seeing evidence that investment appetite is slowly starting to return, in particular for income orientated funds.”
JP Morgan AM is keeping a close eye on the changing regulatory landscape for product sales in Singapore. Creber points to the review of product sales rules taking place that is examining, among other things, mandating to a fee-based (as opposed to product-commission-based) model.
Meanwhile, he says Asian fund passporting would be a positive development for the industry, and suggests a piece-by-piece approach will be most realistic for making this happen.
Creber welcomes the proposal of an Asean fund-passport framework. “Whilst there are many obvious challenges with regard to its practical implementation, we believe ultimately this would be a positive development for the industry and investors within the region,” he says. “So that’s one key area to watch over the coming quarters.”
Scepticism has been expressed in the market about the feasibility of such a regional scheme, but the Monetary Authority of Singapore (MAS) put out its first discussion paper on the subject in April.
Among the main concerns expressed by responses to the MAS consultation are those over tax, currency and regulation. For example, they include how to ensure the consistent application of regulations across jurisdictions, such as on the use of derivatives for efficient portfolio construction, and convertibility of currency issues with regard to offshore funds.
Australia is also seeking to drive a broader Asia-Pacific passporting scheme, but that would be more challenging and take longer to put in place than the Southeast Asian initiative.