Urs Brutsch of HP Wealth Management explains the approach that European-based external asset managers (EAMs) should take when investing in Asia.
Date: Apr 2012
For example, are they looking to set up their own operations and hire local portfolio managers with an Asian capability? Or are they looking just to access Asian investments for their European clients?
If they choose the former, Brutsch said this requires a major commitment in terms of capital and time, as well as patience and holding power before they will make money in a sustainable way.
Being successful in Asia also requires EAMs to find the right people locally to work with, he added.
When considering whether to buy funds in Asia or access investment opportunities in the region directly, Brutsch said EAMs simply looking for exposure to Asian opportunities for their clients’ portfolios can easily just buy a fund.
However, if they want to build a second leg to their European business, this will take time to find the right investments to be successful.
At the moment, Brutsch said that his firm’s asset allocation is slightly overweight equities, given that cash doesn’t offer anything to investors, and that while fixed income offers reasonable returns at the moment, interest rates can only go one way over time.
In addition to equities, he said he advocates at least a 5% exposure to gold.
Allocations to Asia
According to Brutsch, for a balanced investor, which in most organisations would mean an equities exposure of around 40%, Asia would comprise around 10% to 12% of this allocation.
However, he said he thinks that at least one-third of such an equities allocation should be in Asian equities.