Cerulli's latest report from Asia singles out HNWs and the retirement market as two segments that managers should be targeting their products amid market flux.

Managers should consider new product trends and new segments - such as the high net worth and retirement segments - to ride out market volatility and achieve longer term growth in Asia. This is the thrust of a new report from Cerulli Associates. Asian Distribution Dynamics 2020: Gaining the Competitive Edge analyses the top fund strategies that managers are most likely to promote to distributors across local markets within Asia.

With retirees forming a growing part of many Asian communities, the report named Taiwan, Korea, and China as particularly lucrative markets for developing retirement products.

Despite insurance-led products dominating Asian investors' retirement choices, pensions reforms in Taiwan and the growing popularity of target-date funds in Korea are grabbing more market share in parts of the retail retirement sector, Cerruli said.

The report also singles out the high net worth (HNW) segment for attention.

Private banks across Asia have seen sizable inflow into their discretionary portfolio management (DPM) businesses and this is where focus will remain to reduce dependence on transaction-driven income. “Even though DPM assets do not currently take up a huge proportion of private banks’ assets, it looks to be one of their key growth areas,” the report said.

Fixed-income funds dominated most inflows in 2019, and this will continue because of coronvirus volatility, the analyst said. But it cautioned, saying that even though protecting capital, de-risking and finding a steady income are now priorities for nervous investors, managers need to stay on top of matching products to investors and in a granular fashion across the region.

“Managers will have to prioritise their selected markets and investor segments by taking into account the unique characteristics of local markets, and develop the right product positioning to meet investors’ changing needs amid the coronavirus-led uncertainty.”

The group found that thematic funds, such as technology and healthcare, have drawn considerable interest from investors. Taiwanese and Korean managers, in particular, are targeting investments that are developing the 5G mobile industry. “Interest is also building in offering sustainability-themed products,” Leena Dagade, associate director at Cerulli said.

“Despite intensified competition faced from managers offering exotic investment strategies, some growth opportunities - like the demand for alternatives, interest in thematic investing, popularity of fixed maturity plans, and growth in private banks’ DPM businesses - present long-term potential for managers,” said Cerulli analyst Radiance Ang Huey Li.