Banks to spearhead Asian fund growth

MUTUAL fund assets in Asia, excluding Japan, are expected to grow to US$495 billion by 2006, up from US$252 billion at the end of 2001, according to a recent report from consulting firm Cerulli Associates.

The rise represents a compound annual growth rate of 14 per cent, making the region one of the fastest growing retail asset management markets in the world.

The report found banks in the Asian marketplace will spearhead the distribution of mutual funds due to a dominant sales force in several countries. Their share of the mutual fund market is expected to reach 51 per cent by 2006, up from 39 per cent in 2001.

Citibank has been labelled the top distributing bank in the region after a survey of asset managers in Hong Kong, Singapore, Taiwan and Korea. Standard Chartered Bank and HSBC were the other powerful distribution players in the region, Cerulli says.

In some markets, including Singapore and Taiwan, banks could face some competitive pressure from online platform-based distribution and independent financial advisers, although the most serious threat is expected to come from insurers, the Cerulli report says.

According to Cerulli, China, which is the third largest retail asset management marketplace in the region, will be the fastest growing market in Asia going forward.

Mutual fund assets in mainland China are expected to grow from US$10.3 billion at the end of 2001 to US$37.6 billion in 2006, representing a compound annual growth rate of 29 per cent, Cerulli says.