Billiet, who assumed his role in Singapore nine months ago, said the firm is focusing on adding its emerging market and ASEAN capabilities onto its distributors’ platform, though he could not give a timeline.
“It is a lengthy process. Signing a contract is one thing, but then having your products reviewed, approved and finding a space on the distributors’ shelf is a very time consuming process.”
On-boarding strategy
Furthermore, he said a lot of distributors are looking at shrinking product offerings and focusing on the current range.
“Product on-boarding is really linked to where you are in a market cycle. The right time to present our capabilities is when distributors are doing reviews of particular asset classes. So gradually we can get more products approved,” Billiet said.
He noted that the firm’s fixed income capabilities are not on the platform. Investors are not keen on the asset class due to worries over rising interest rates, he said.
Billiet added that the firm has had success in on-boarding its funds and has added multi-asset funds this year. But, there is a lot of room to grow.
“Our competitors have been here for a very long time. They already have all products [on platform]. We haven’t been through a full market cycle yet. It will take time for us to go through one or two market cycles before we have our full range of product offerings approved and available with distributors.”
The fund house already has ties in Singapore with retail and private banks, including foreign banks like HSBC or Standard Chartered and locals like UOB, OCBC and DBS.
Further, the fund products are also available with insurance companies like Prudential and major financial advisers.
“It is all about deepening and strengthening these relations.”
Southeast Asia growth
The firm started to focus on Southeast Asia in last two years. Funds under management from clients in Southeast Asia have grown by 25% year-to-date, driven predominantly by Singapore.
“The private banking market still continues to grow in Singapore and there is an overall trend of more discretionary portfolio management. The overall pie is growing and the share of funds within the private banking portfolio is growing,” Billiet said.
In Southeast Asia markets, JPMorgan does not distribute products. It works with local asset management companies and insurance companies to feed the funds or launch insurance-linked plans that feed into its offshore funds.
As the firm expands its business, it plans to increase the Southeast Asia headcount, particularly in sales, client support and marketing areas, he added.
RQFII licence eyed
The firm is awaiting its RMB Qualified Foreign Institutional Investor licence for Singapore business as it plans to expand its China-focused range of products.
“We are definitely keen to continue to expand our China offerings, in share classes or through dedicated China funds. There is an appetite for RMB-denominated investments, but a little less in Singapore than in Hong Kong.”
The fund house in August launched a China A-share dedicated fund through its RQFII licence for Hong Kong business.
Multi-asset flows
With US interest rates likely to rise, client appetite for income-oriented strategies has increased, Billiet said, citing equity income funds and high dividend yielding stocks.
Within fixed income, there is a re-allocation from long-duration government bond products into flexible fixed-income capabilities or more credit-oriented strategies, he said.
High yield strategies are still doing quite well.
“There is still appetite for fixed income in certain pockets. Less US-centric, but Asia and Europe definitely see interest for higher yielding fixed income products particular on credit side.”
“We have seen interest from clients in investment grade credit, European high yield, Asian high yield, and total return strategies.”
Further, people who want to come out of fixed income are moving into the multi-asset category.
“We are seeing flows in multi-asset product categories last year and this year too from retail and private banks and insurance companies.”
In terms of geography, the Asia theme is coming back, and Asian equity, fixed income and multi-assets are starting to gain traction, he added.
Investment churn
Billiet said the churning of investments to achieve higher fees is resulting in high turnover rates.
“It is very difficult to change the distributor mindset. If the incentives for the distributor in the way they sell funds doesn’t change, then this is probably going to be a challenge.”
At some stage, there could be regulatory measures including a fee ban to address this issue or possibly fees coud be charged directly and separately to clients by distributors, Billiet said.
“That’s something that can probably dramatically change how funds are distributed. Because then there would be no more incentive to churn investments. Long-term investing, [wider] asset allocation and diversification would then probably be more embedded.”
