Retail investors in Malaysia, Singapore and Thailand will have access to a wider pool of investment products with the implementation of cross-border fund offerings in the region expected to happen by the third quarter of this year.
The Monetary Authority of Singapore, the Securities Commission of Malaysia and the Securities and Exchange Commission of Thailand signed an agreement last year to facilitate the rollout of the project.
“This will offer fund managers a direct and efficient route to distribute their funds in other economies,” senior consultant Sheela Veerappan told reporters after the presentation of the Morningstar Malaysia Fund Awards 2014 yesterday.
Singapore-based Morningstar Investment Management Asia Ltd, an investment research firm, offers an extensive line of products and services to individuals, financial advisors and institutions.
Sheela said similar cross-border fund offerings were already being practised in the United States.
Meanwhile, Morningstar’s research analyst Arne Hike said that investors today were becoming increasingly “discerning” on which funds to pick to outperform the average portfolio.
“We noticed that in 2011-2013, investors were selling those funds that had done poorly on a peer-relative risk adjusted basis and putting their money into funds that were doing well on the same basis instead,” Hike said in his presentation.
Within the Asian region, Hike said there were plenty of opportunities for mutual fund growth, given the population dynamics favouring the region today.
“Asia has about 60 per cent of the world’s population, but only 12 per cent of the total assets under management in mutual funds.
“Household financial assets are about the same in absolute terms across the different markets so on a per capital basis is going to be lower in Asia,” he said.
“But this also really highlights opportunities that would crop up over the next few years in Asia for the gathering of mutual fund assets,” he added.
Equities remained a favoured asset class this year, despite increasing worries about high valuations.
“We’re still seeing good interest in Asian equities, but a lot of investors are also exploring diversification (of portfolios). They are biased domestically and equities in the region have performed very well, but now we find that investors are exploring other areas,” said Sheela.