The firm cast its eye over trends in Asian wealth and asset management markets.

Total retirement assets in China will rise to over RMB9 trillion ($1.3 trillion) by 2022, a large market for wealth managers, according to research and analytics firm Cerulli Associates in a study of recent Asian trends.

Asian mutual fund assets rose by 19.5 per cent in 2017, an improvement over the 5.7 per cent increase seen in 2016. These grew by 8.2 per cent in the first nine months of 2018; China accounted for the largest share of the pie at 53 per cent, followed by Japan at 16.5 per cent.

The decline in stock markets in much of the world last year, amid nerves about US-China protectionism and higher US interest rates, may have hit progress on the mutual fund assets front, but from a long-term point of view Asia’s investment sector holds big potential, practitioners say.

China has been liberalising its capital markets, allowing foreign-owned businesses such as wealth managers to operate in the mainland, although restrictions remain.  Recent developments have boosted demand for Chinese securities. MSCI, the benchmarking and index provider, announced in September that it may raise the weighting of mainland China’s A-shares from the current 5 per cent to 20 per cent, taking place in phases.

Elsewhere in Asia, Cerulli noted that in South Korea, target-date fund assets more than doubled over the first nine months of 2018, meanwhile. Cerulli said that this area will encourage foreign players to expand their presence in this area because they can partner with local players to launch such products through sub-advisory and feeder agreements.

Cerulli turned to the case of Taiwan, noting that in the area of fees, the Taiwanese regulator has moved to reduce fund “churning”, such as banning charges for initial fixed fees for marketing and sales campaigns, and revising the calculation of commissions, basing these on net sales instead of gross sales. Over in India, Cerulli noted that the regulator cut costs incurred by end investors, directing fund houses to move to a trailer fee-based model of commission in October last year.

The report from the firm added that Hong Kong and Singapore regulators are battling to get an edge as fund management hubs. In Hong Kong, open-ended fund company regulations introduced last year allow managers to launch funds under a new corporate fund structure in addition to the current unit trust form. In Singapore, the Variable Capital Companies bill was passed last October, aimed at domiciling funds in the city-state. “These measures to build fund domiciles will bear fruit only over the longer term,” Cerulli added.