Thursday, July 9, 2020 Stamford, CT USA — The COVID-19 pandemic has given the biggest brands in asset management an advantage in the race to claim a share of the growing pool of assets allocated to external managers by institutions in Asia.
Asian institutional assets have grown by more than 80% since 2012, reaching nearly $15 trillion in 2020. Over that same period, institutions throughout Asia increased the portion of their assets outsourced to external firms for management from 16% to 22%.
The growth in externally managed assets, to some $3.3 trillion, is creating a vast new market for the world’s asset managers. Until recently, however, managers trying to establish a presence in Asia were reliant on their success winning business from just a handful of massive institutions that controlled the bulk of these assets. In 2016, a group of just 15 sovereign wealth funds, central banks and other large institutions controlled 84% of Asia’s externally managed assets.
The situation is considerably different today. The top 15 institutions in the region now control 61% of externally managed assets with several other institutions becoming large outsourcers.
2020 Greenwich Quality Leaders
Allianz Global Investors and PIMCO, the 2020 Greenwich Quality Leaders in Asian Institutional Investment Management, both stepped up as soon as the crisis began by reaching out to clients and helping them navigate the volatility.
Greenwich Associates measures asset manager client service quality on the Greenwich Quality Index (GQI)—a composite measure derived from ratings assigned to individual managers by their institutional clients. For both Allianz Global Investors and PIMCO, GQI scores increased significantly after the onset of COVID-19, while scores for several other competitors in the region fell.
Allianz Global Investors and PIMCO were able to achieve this level of service excellence through a combination of IT infrastructure and corporate culture. “Although the COVID-19 disruptions to institutional portfolios and manager hiring might be temporary, the goodwill these managers earned by supporting their clients through a time of crisis should prove much more lasting,” says Greenwich Associates consultant Parijat Banerjee.
Asian Institutions Adopting ESG
ESG investing gained traction among Asian institutions at a rapid rate last year. In 2018 and 2019, the share of Asian institutions reporting that they employed ESG criteria in manager hiring decisions was essentially flat, at about one-third. In 2020, that share jumped to 42%, with at least a quarter if not half the investors in each important Asian country using ESG factors in their manager hiring decisions.
Despite the rapid uptake over the past 12 months, ESG is still very much a work in progress—not only for Asian institutions but also for investors around the world, and many asset managers are investing heavily in their ESG capabilities and marketing.
“Managers are hoping to use their expertise in this important emerging area to create new relationships with Asian institutions, and to strengthen and deepen relationships with existing clients in the region,” says Greenwich Associates Managing Director Markus Ohlig.