Data from Cerulli Associates found that Southeast Asian investors’ appetite for overseas funds was on the uptick in the first half of 2015.
The firm suggested this rise could stem from investors in the region becoming more sophisticated, with many turning to high-yield investments overseas.
However, Cerulli suggested the political turmoil in Malaysia and the bombing in Bangkok in August means many investors have probably started tightening their purse-strings.
Silver-lining
“A silver lining in the recent uncertainties in Thailand and Malaysia might seem counter-intuitive at first, but as emotions calm, the events in those countries might serve fund managers well in educating investors on the need to diversify beyond their local currencies and home ground,” said Shu Mei Chua, an associate director at Cerulli.
"As emotions calm, the events in those countries might serve fund managers well in educating investors on the need to diversify beyond their local currencies and home ground"
Feeder funds have been the preferred route among foreign fund managers in accessing retail assets in Southeast Asia, a route favoured long before discussions for the ASEAN Collective Investment Scheme (CIS) framework started, Cerulli said.
Master-feeder structure
The US-based research firm found that local fund managers based in Southeast Asia were eager to work with foreign managers under the master-feeder structure when launching funds.
“The master-feeder arrangement isolates foreign managers from the risks of keeping an onshore presence, and circumvents cumbersome distribution issues related to the ASEAN CIS scheme,” said Cerulli’s Asia research director Yoon Ng.
Ng predicted that feeder funds are likely remain the most-preferred route for global managers to access retail assets in Southeast Asia.”
