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Asian institutions breach $10 trillion in assets in 2012

India Infoline News Service | Mumbai |

Cerulli Associates forecasts assets to continue to grow between 2013 and 2017 and hit US$17 trillion by 2017

As assets grow, institutions' growing appetite for alternatives will help drive opportunities for external managers.

Investable assets of Asia ex-Japan institutions breached US$10 trillion for the first time in 2012, rising by 9.6% year-on-year.

Cerulli Associates forecasts assets to continue to grow between 2013 and 2017 and hit US$17 trillion by 2017, representing a compound annual growth rate of 10.1%. Stronger increases are expected from Southeast Asia, as institutions in those markets are relatively underdeveloped and are growing their assets from low bases.

These are some of the key findings of the Cerulli Report entitled Institutional Asset Management in Asia 2013. It comprehensively examines the region's institutional landscape and outsourcing opportunities for external fund houses.

Cerulli expects that two key factors will likely drive institutional outsourcing across Asia ex-Japan-growing appetites for alternatives and deregulation.

Alternatives allocations still remain small at most institutions, often accounting for less than 10% of their overall portfolios, but these allocations are increasing steadily. External managers play many roles in assisting institutions in alternatives, including co-investing and conducting due diligence, and it is good to start as early as possible.
"Managers that start engaging institutions early-even when the latter are not ready to allocate to alternatives-will stand a better chance of winning mandates when an institution is ready to invest," says Cerulli senior analyst Chin Chin Quah, who led the report.

Meanwhile, deregulation is freeing up the investment shackles of some institutions. China has been at the forefront with a series of deregulations, especially for insurers. From late June this year, insurers have been allowed to set up fund management units to offer mutual funds to retail and institutional investors.

"It could be a way for global fund houses to participate in China's retail and institutional markets if they are able to team up with the right local insurers," says Ken Yap, Singapore-based director and head of Asia-Pacific research at Cerulli, citing the recently approved joint venture between Australia-based AMP Capital and local insurer China Life as an example.
 

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