|
Timothy Inklebarger
Monday, October 5, 2009
�
Asian institutional investors outside of Japan curtailed their use of external investment managers in response to the world financial crisis, according to a Greenwich Associates study.
In the first quarter, 15% of Asian institutions outside of Japan planned to increase outsourcing of offshore assets, and 18% planned to use external managers to run domestic assets, according Greenwich�s 2009 Asian Investment Management Study. That�s far lower than in the first quarter 2008, when 92% planned to have more external managers run offshore assets, and 45% planned to increase outsourcing of domestic assets.
The decrease is the result of the performance of those investors� internally managed portfolios being equal to or better than those run externally during last year�s financial crisis. Roughly 87% of Asia�s estimated $5 trillion in assets is managed internally as of the March 31, Greenwich said in a news release on the study.
�Due to their lack of equity exposure and the nature of their fixed-income holdings, internal portfolios held up relatively well during the market downturn,� Greenwich consultant Markus Ohlig said in the news release. �By contrast, Asian institutions have been much more likely to outsource equity investments, and as a result, they were much more likely to be disappointed by the performance of their external managers.�
The report�s authors were not immediately available for further comment, according to Greenwich spokeswoman Joan Weber.
Fifty-four percent of institutions surveyed said they plan to expand internal management by 2012. The trend is being driven by smaller and midsize institutions � 73% of institutions with externally managed assets between $250 million and $999 million said they plan to expand internal investment. For institutions with $1 billion or more, 47% are planning to expand internal management by 2012.
Also, in the first quarter, average fixed-income allocations among Asian institutional investors were up 6.1 percentage points from the first quarter of 2008 to 68.6%; equities were down 7.2 percentage points to 17.6% and the rest in other assets classes that were not defined.
Twenty percent of respondents plan to increase their cash allocation over the next three years, up from 6% in 2008. Survey respondents planning to increase allocations to private equity dropped 25 percentage points to 25%; those planning increases to hedge funds dropped 13 percentage points to 29%; and planned increases to real estate dropped 23 percentage points to 15%.
Interviews with 135 professionals at 18 of the largest institutions in Brunei, China, Hong Kong/Macau, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand, were conducted January through March.
|
