Consistent results are the priority for Asian asset owners while selecting external managers

CIO Review APAC | Tuesday, February 09, 2021

Asian asset owners mainly focus on consistent returns when it comes to selecting external managers

FREMONT, CA: When it comes to selecting asset managers, Asian asset owners place a high focus on consistent returns. A new Asset Owner Insights (AOI) analysis demonstrates that the information supplied, experience in new asset classes, and research approach all play a role in the decision. The consistencies of asset managers’ performance, as well as their performance against the benchmark, are major factors in the selection of external managers. The quality of asset managers' reports and information has an impact on asset owners' decision-making.

According to the survey, the utilization of artificial intelligence (AI) and other technology is the least essential criteria in short listing managers. As of the end of September, 2021, the AOI survey had received 70 responses from asset owners across Asia Pacific (Apac), representing a total of 5.35 trillion dollars in assets under management (AUM). In general, Asian markets lag behind the United States and Europe in terms of information disclosure, including requirements for Environmental, Social, and Governance (ESG) data. Interestingly, nearly half of the asset owners polled place a high priority on how asset managers distribute reports and information.

Anthony Petalas, portfolio manager at UK pension pool Border to Coast Pensions Partnership, told AsianInvestor that choosing a manager in China takes extra effort, as the firm's ESG disclosures must be monitored. It's not about the size of the organization when it comes to ESG integration. Although a big asset manager may have unlimited resources, the focus is on the underlying investing teams with whom they work. They want to know the team's mindset and thinking on ESG because it gives more trust in proper integration, Petalas added.

The quality of data and disclosures is the fundamental difference in ESG integration between developed and emerging economies.

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