27 June 2017 |

IAMs’ allocations to alternatives are double those of PBs in Hong Kong

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Proof that private equity continues to be all the rage in Asia, independent asset managers (IAMs) in Hong Kong allocate nearly a third (32%) of their client assets to alternatives – more than double the level recommended by private banks, according to a survey by APB Mandate.

APB Mandate’s bank-weighted asset allocation industry overview (based on a multi-asset, medium risk profile) shows that private banks have a 15% allocation to alternatives.

Meanwhile, the survey shows that 30% of respondents either do not have existing house views or do not implement traditional asset allocation strategies, opting for other approaches such as factor-based allocation strategies instead.

A number of IAMs reported that they have seen strong and persistent growth in their allocations to alternatives, mostly fuelled by global private equity deals.

Meanwhile, the survey also reveals that IAMs in Hong Kong allocate 35% of their client assets in Asia towards illiquid investments.

Category (Single-country equity only)Traffic share
China (Equity / Countries)28.67%
USA (Equity / Countries)22.13%
India (Equity / Countries)15.11%
Japan (Equity / Countries)8.78%
Singapore (Equity / Countries)8.68%
USA, Small and Mid Caps (Equity / Countries)3.36%
Indonesia (Equity / Countries)3.03%
Thailand (Equity / Countries)1.69%
Belgium (Equity / Countries)1.39%
Japan, Small and Mid Caps (Equity / Countries)1.18%

A recent EY report shows that private equity firms raised US$132 billion in 1Q17, for 153 funds, a 6% QoQ increase. This was driven by buyouts and infrastructure investments.

Still, the industry expects flat private equity growth this year, after total private equity deal values in Asia declined to US$92 billion last year from a record-high of US$124 billion in 2015.

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