Despite maintaining a cautious approach to investment strategy, wealth managers across Asia have pinpointed growth as the most important product feature this year, according to an industry survey.
Date: April 23, 2010
Tags: Growth, Capital protection, China, India, Indonesia
Despite maintaining a cautious approach to investment strategy, wealth managers across Asia have pinpointed growth as the most important product feature this year, according to an industry survey.
Compared with 2009, the results of Barclays Capital survey, which spoke to 159 market participants from 58 wealth management organisations in eight countries across Asia ex-Japan, reflect a slightly higher risk appetite among investors.
This can be seen through wealth managers’ recommendations for a balanced-risk investor portfolio which includes increase weightings in Asian equity, other emerging markets equity and emerging markets bonds. Allocations to historically lower-risk cash and bonds in developed markets have fallen.
Yet investors are still proceeding with caution, the survey showed.
For example, capital protection continues to be the most popular investment strategy by a significant margin, with 75% of clients making substantial or full use of capital protection, according to the survey’s respondents. Multi-asset strategies ranked second, with 50% of clients making substantial or full usage.
The survey also showed that exchange-traded products have become more popular compared with last year given their perceived higher transparency and liquidity.
“Investor appetite for more complex structured investments remains quite reserved, as they continue to look for yield-enhancing back-to-basics structures,” said Peter Hu, head of non-Japan Asia investor solutions at Barclays Capital. “However, the mood, while still cautious, is beginning to show signs of renewed optimism as growth products become increasingly important as clients take on additional risk.”
At the same time, nearly two-thirds of respondents – which between them have over US$5 trillion of assets under management – said they expect revenue growth of more than 6% per annum over the next two years in Asia.
In particular, market participants expect to see stronger growth in the high net worth and ultra-high net worth client segments during this period.
The survey highlighted China and India as the most attractive markets in Asia, both in terms of potential for business expansion and expected revenue growth rate over the next two years. Indonesia surpassed Hong Kong as the third-most attractive market in terms of potential for business expansion.
