After a rotten performance for markets in 2022, fund houses are ramping up their product offerings that cater to the needs of Asian private bank clients in 2023. Below, two big asset managers outline what will be in focus for them this year.
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J.P. Morgan Asset Management: Insights and solutions
Over the last five years, J.P. Morgan Asset Management (JPMAM) has onboarded 55 of its strategies to almost 30 private banks in Asia Pacific. These products cover ASEAN, China, US, and ETFs on the equity side, as well as fixed income, global income, multi-asset income, and real assets.
“2022 emerged as one of the most challenging years we have seen in a decade and it’s usually through these challenging times that our clients rely more on our investment insights and solutions,” Dennis Yang, head of private bank distribution for Hong Kong at JPMAM, told Asian Private Banker.
“During the course of a volatile 2022, we still observed strong interest in our Income, US value, ASEAN, China A-share and infrastructure fund solutions.” Income strategies were among the most popular solutions in 2022. JPMAM’s multi-income fund fell 8% in 2022, outperforming MSCI World, which dropped 17%.
Weaning clients off home bias
Despite private banks presenting clients in Asia with a range of solutions for product diversification in recent years, Yang said “home-bias” remains a challenge when onboarding any new strategy.
“Core, developed market equity solutions, for example, is one of the areas that is still under- exposed for some clients,” he noted. To wean clients off this home bias, JPMAM is looking to introduce its flagship global, core equity solutions to Asia in 2023, which have a strong track record and sales momentum in other markets, Yang said.
“With the market reset in 2022, we believe this would present an attractive entry point to start accumulating positions in this core strategy. Meanwhile, we will continue to build out our suite of sustainable investing solutions with a focus on fixed income.”
“We also look forward to introducing some of our successful real-asset strategies to our private bank clients in the region,” he highlighted.
Fixed income strategy capturing interest: T. Rowe Price
Given the market underperformance in 2022, T. Rowe Price believes that private banks have had a low appetite for onboarding new funds.
“Talking to all the distributors, some of them have not onboarded any funds in 2022 – they are just leveraging on their existing suite, and some just onboarded two to three new funds. Activities have been pretty low in terms of new fund onboarding,” Glen Lee, head of Asia ex-Japan intermediary business at T. Rowe Price, told Asian Private Banker.
While sentiment was weak, the US$1.34 trillion AUM fund manager has onboarded a handful of strategies to a few private banking platforms, including those covering health science, China equities and global growth equities.
Also, T. Rowe Price says it has seen good traction across its unconstrained, dynamic fixed income strategies, particularly in its dynamic global bond fund, which generated returns of 4.17% last year.
More volatility in 2023?
For 2023, Lee believes that T.Rowe Price’s private bank distribution pipeline for its unconstrained fixed income strategy looks positive. The firm is talking to a number of private banks that are interested in onboarding it. One will soon launch it on its platform.
“Our view [for the market] this year is that the market will continue to be volatile … and we believe the relevance of our fixed income strategies will continue this year and beyond, because the fund has negative correlation not just to the traditional fixed income fund, as well as it has negative correlation to the equity market,” Lee explained.
“We did some analysis to blend this fund with a broader portfolio, and it has actually helped the portfolio to deliver better risk adjusted return.”
Making an impact
Impact investing is another area that T. Rowe Price wants to focus on more in 2023. Apart from its global impact equity fund T.Rowe Price, launched in 2021, the firm is looking to roll out a multi-asset impact credit strategy this year.
“We are building our shelf of impact investing. We are patient about it and are actually growing our track record and AUM. To complete the range, we are also looking to launch US impact credit and US impact equity strategies as well. These are all in the pipeline.”