Funds passport can add $100 billion to Australian sector
The Asian Funds Passport has the potential to add $100 billion to the Australian Funds Management sector even from a moderate increase in the number of foreign investors accessing Australian domiciled products, according to the head of an Asian based fund manager.
Nikko Asset Management Australia managing director, Sam Hallinan, said his group, which is headquartered in Japan, has examined the potential for the Australian market and found that at present four per cent of fund management assets as sourced offshore from the Asian region.
"If we can double that to eight per cent, that represents a further $100 billion added to the local funds management sector via the passport," Hallinan said.
He said the mechanics of the passport would allow Australian funds to be offered into other jurisdictions as they stand with a ‘wrapper', which would include any specific localised regulations. This would be a two-way operation with overseas funds offered into Australia on the same basis.
However, Hallinan said Australia needed to work on making its funds more attractive to Asian investors by bringing its Collective Investment Vehicle structures and tax equalisation measures in line with its passport partners.
"People overseas are looking to Australia as we have a $2.5 trillion market with depth and sophistication and there is thirst for income in the Asia Pacific region," Hallinan said.
Hallinan said Nikko was already working on adapting Australian products, mainly around the income generating space, and expected to roll them out first into Singapore.
AUTHOR
Jason Spits
Recommended for you
Clime Investment Management has welcomed an independent director to its board, which follows a series of recent appointments at the company.
Ethical investment manager Australian Ethical has cited the ongoing challenging market environment for its modest decrease in assets over the latest quarter.
Commentators have said Australian fund managers are less knowledgeable compared with overseas peers when it comes to expanding their range with ETFs and underestimating the competition from passive strategies.
VanEck is to list two ETFs on the ASX next week, one investing in residential mortgage-backed securities and the other in Indian companies.
