Asia ex-Japan fund managers had to adopt or step up their adoption of digital channels in 2020, and many are planning to do the same in 2021. According to our research, most managers in the region place the highest priority on marketing and sales efforts, ensuring robust liquidity risk management, and investing in digital platforms. Cost has also been in the spotlight, as uncertain growth has prodded fund managers to seek ways to manage operating costs more effectively—reducing operating costs is the fourth most important priority to managers seeking to ease the impact of COVID-19.

Increased competition, use of online platforms, and the gradual rise of passives are expected to continue fueling fee pressures and weigh adversely on managers’ margins over the medium to long term. While delivering consistent performance is important to retaining investors, managers are also likely to focus on cutting operating expenses and improving their product mix to include higher revenue-generating products, such as alternatives, and targeting wealthy investors for revenue growth.

In terms of product trends, thematic equity funds have been gaining traction across all markets in Asia recently, with healthcare; technology; and environmental, social, and governance (ESG) themes coming under the spotlight. Alternative investments will continue to play an important role in the portfolios of the wealthy clients. Apart from these emerging themes, many investors are still expected to look for Asian equities, Chinese equities, and Asian fixed income, as indicated by Cerulli’s survey of managers in the region.

Read more in The Cerulli Report—Asian Distribution Dynamics 2021: Navigating the Post-Pandemic Landscape.