Jupiter flags retail strategy, plans Asia funds

Having obtained a dealing licence in Hong Kong in April, UK-based Jupiter Fund Management has been busy expanding its presence in the city and working on distribution agreements.

Peter Swarbreck, who joined the firm as head of Asia Pacific in April, has added three staff – one sales and one marketing executive, and an office manager – on top of sales director Tony Yu, who joined earlier this year. Swarbreck, who is also looking for a compliance executive, says he expects to move the team into permanent offices in Central by mid-December. 

On the investment side, Jupiter manages its funds in London and has no plans to put such capabilities in Asia, but Slendebroek doesn’t rule it out. “That’s something we’d might like to have in future,” he says. But he cites the firm’s view that having the centralised asset management team in London is beneficial for the purposes of interaction and exchange of ideas.

That said, the firm does plan to build up its Asian investment expertise. It has an Asia ex-Japan equities fund, but not a fixed-income product focused on the region – “that’s an area we’d like to expand into”, says Slendebroek.

For the time being, investment staff will remain in London and travel to Asia as required for as long as they need to be in the region.

Hence the company has no plans to register Hong Kong-domiciled funds, with an eye on the planned China-Hong Kong cross-border mutual recognition scheme. It will continue to deploy Sicav products for now, which account for some 10% of its AUM, up from zero five years ago.

Less than 5% of Jupiter’s assets are sourced from Asia, estimates Slendebroek, and “we want it to be more; a lot more”.

Jupiter has had a salesman, David Conway, in Singapore for three years and will retain a presence there, although Hong Kong is the regional hub. Swarbreck also spends a significant amount of time in the Lion City, where the firm can sell to accredited investors. He points to the importance of Singapore as Southeast Asia's wealth management hub.

But Hong Kong was the obvious choice as the Asian hub, notes Jamie Dundas, non-executive chairman of Jupiter.

“When it became time for us to build out from our core base in the UK and look at distribution into other key markets, Hong Kong was going to be a natural destination,” says Dundas, who spent five years in the city as chief financial officer of the Hong Kong Airport Authority. He returns regularly to the region as a non-executive director on the board of Standard Chartered.

The fund house’s approach is different from that of most foreign asset managers expanding into Asia. As a largely retail player, it aims to build a presence by selling mutual funds in the wholesale market rather than by winning mandates from institutional investors. Mutual funds account for £23.4 billion ($35 billion) of its £29.9 billion in assets under management.

This makes building brand awareness all the more important. Moreover, getting on distribution platforms in Asia has been getting increasingly tough. Since the 2008 crisis, banks – by far the main distribution channel in the region – have sought to cut costs by reducing the number of products on which they have to conduct due diligence, and that trend is continuing.

Swarbreck acknowledges such challenges, but says “there’s always room for excellence and outperformance”.

Maarten Slendebroek, London-based head of global distribution, tells AsianInvestor: “We’re definitely not closet benchmark-huggers.” (Sixty-five percent of its funds are in the top quartile of their category over the past 10 years, with 14% in the second quartile.)

The firm has the added advantage that it is a retail market specialist. It works harder at, and spends more on, supporting its distributors than many others, by providing sales tools and training salespeople, he says. “This is not an afterthought for us, it’s a specific focus.”

Still, having distribution relationships in Europe is no guarantee they will be extended to Asia. Jupiter’s starting point is to negotiate with its existing partner firms with operations in the region, but Swarbreck declined to provide names, as talks are still ongoing. “The big global names you know are the areas we want to play in,” he says.

A presence on the ground is important not only for the purposes of client servicing and brand building, but also for dialogue with local regulators, notes Slendebroek.

Asked which Jupiter products he expects to be most successful in Asia, he points to income-type funds, both multi- and single-asset. “Increasingly retail clients want to get a steady income and not to lose money.” In addition, they are more willing now to seek a wider range of global underlyings, he adds. “This is a big trend.”

Another trend of recent years has been the rise in demand for fixed income, which is reflected by Jupiter’s own asset flows. The fixed income portion of its AUM has been growing much faster than the equity portion. The ‘fixed interest and mixed asset’ portion of its AUM is now 45% of its AUM, up from 36% three years ago.