Credibility and Performance Continue to be the Key Criteria for Selecting Asset Managers

HONG KONG – Asian investors are becoming increasingly risk averse and seeking to diversify their portfolios to improve resilience during this period of market volatility, according to FleishmanHillard’s The Future of Asset Management in Asia 2023.

Published together with the agency’s TRUE Global Intelligence practice, the report features analysis drawn from an online survey of Asian investors. The report also includes an overview of the latest trends in Asia’s asset management industry.

The 2023 Asia report shows that Asian investors view inflation and stagflation as their biggest financial risk (50%) in 2023, triggering them to diversify their investments to build resilient portfolios. Despite equities funds (67%) and fixed income funds (56%) continuing to be the most frequently traded asset classes among this audience, the number of investors who said that they traded or invested in equities funds declined 10 percentage points from a year earlier. In addition, a number of investors said that they traded or invested in cryptocurrencies and other digital assets (39% in Asia excluding mainland China) and private equity funds (28%). Around half (47%) of investors in the region said they have used ChatGPT or other AI tools to provide them with guidance and advice. However, 54% of the investors who have used ChatGPT or other AI tools said that it was not helpful in investment decision making.

“During this current period of high volatility across global capital markets, we’ve seen growing interest from investors for private equity, alternatives and even semi-liquid products. This presents growing opportunities for asset managers to double down on their efforts on product diversification and innovation to appeal to investors’ interests,” said Patrick Yu, Asia Pacific lead of FleishmanHillard’s Financial and Professional Services sector.

Similar to the results in last year’s report, the 2023 report also shows that the performance (94%) and credibility (93%) of the asset management house continued to be the top two most important criteria for investors in Asia Pacific (APAC) in asset manager selection. The ESG commitment of asset managers (82%) continues to rank highly in criteria for asset management selection, as ESG plays a central and integral role for most investors in APAC when making investment decisions.

In addition, respectively 90%, 89% and 89% of the Asian respondents said that transparency in communications with customers, sophistication in risk management, and transparent fee disclosure are amongst the most important qualities for asset managers respectively.

“It’s clear that an asset manager’s credibility and performance continue to be major factors for investors in Asia when they decide on where to invest their capital,” Yu said. “Asset managers must continue to demonstrate their global investment expertise and capabilities, ESG commitment and enhanced transparency in customer communications to raise their profiles across Asian markets.”

The survey also found that:

Investors in Asia continue to show interest in emerging industries. In the next 12 months, investors are most interested in investing in the AI sector (50%), followed by the internet and technology sector (40%) and the biotechnology industry and healthcare sector (38%). ESG-related investment opportunities (34%) and cryptocurrencies (29%) are two other sectors to keep an eye on in 2023.

Investors in South Korea (34%) and mainland China (29%) are more risk averse and tend to shift their investments into risk-off products, while investors in Hong Kong (31%) are more willing than other APAC markets to move some capital into higher risk financial instruments.

Financial media outlets (53%) remain the key source of information for investors to learn about funds and investment products, but an increasing number of investors across the region use social media to receive investment related information – 43% in 2023 vs. 33% in 2022 – outperforming usage of the websites of fund houses (39%) and independent financial advisers (36%).

With regard to ESG commitment and compliance, investors in the region say it’s important for asset managers to “walk the talk” when proxy voting in listed companies (88%). A similar percentage (86%) place importance on transparency from asset managers in ESG data and protocols, as well as clarity in ESG goals and objectives (85%).

FleishmanHillard’s The Future of Asset Management in Asia 2023 report includes quantitative data and qualitative analysis on the asset management industry in Asia. FleishmanHillard TRUE Global Intelligence fielded an online survey of 1,000 investment professionals in mainland China, Hong Kong SAR, Singapore and South Korea between April 4 and April 11, 2023. All respondents self-identified as having traded or invested in at least one of the following: equities funds, fixed income funds, ETFs, alternatives, balanced funds, PE funds, digital assets or cryptos.A mainland China focused report, The Future of Asset Management in China 2023, is also available for asset managers interested specifically in this growing market.

Following the success of the previous Asia and China reports, FleishmanHillard is pleased to announce that it will launch European and U.S. versions in the coming months to provide more perspectives on the asset management industry.