IAMs’ Investment Strategy Report 2019

The IAMs’ Investment Strategy Report 2019 offers a deep-dive into the independent asset management (IAM) market in Hong Kong and Singapore and focuses on IAM investment strategies and the increasingly important role of structured products and, in particular, actively managed certificates (AMCs). Based on 39 collected questionnaires, 18 face-to-face semi-structured interviews, proprietary data from past research, and secondary sources, the report offers a thorough market breakdown that underscores the positive outlook for the IAM industry, confirming that it is, indeed, taking off.

Despite the challenging market conditions that reversed the AUM growth of the top private banks in Asia (ex-China onshore), IAMs performed notably well as they experienced a 27% annual increase in revenues, a 10% rise in client numbers, and a 28% uptick in RM headcount. In the turbulent markets of 2018, IAMs adopted more passive investment strategies and have also increased their exposure to fixed income and derivatives/structured products, which now respectively account for 30% and 11% of portfolios. Inversely, equity exposure has dipped considerably from 47% last year to 34%.

Against a backdrop of volatility, heightened demand for structured products was also seen and the percentage of total revenue attributable to structured products at IAMs in Hong Kong and Singapore rose annually by 25% and 24%, respectively. Furthermore, respondents reported an increased adoption rate for electronic platforms, with 39% of IAMs now using either single- or multi-dealer platforms for structured products pricing and execution, versus less than 10% in 2017.

The latter part of this report focuses on AMCs and highlights the increased attention the instruments have been receiving due to their attractive pricing and flexibility – especially when it comes to usage within discretionary portfolios. 53% of IAMs project that the demand for AMCs will continue to increase in the coming three years.

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The research was conducted independently by Asian Private Banker, but was made possible through the sponsorship of Julius Baer.