Fund managers are adopting riskier strategies as the pressure to perform becomes more intense, according to a new survey of the industry in the Pacific Rim region conducted by ratings agency Moody’s.
A report based on the company’s first online survey carried out in June last year of predominately portfolio managers in the Pacific Rim region (which included Singapore, Hong Kong and Australia) found that factors such as a search for yield in a low interest rate environment, differentiating funds from competitors and high performance targets have changed the risk profile of the managed funds industry. One of the report’s authors, Moody’s senior vice presidents Kathryn Kerle, said: “;The concerns raised by Asian fund managers mirror those expressed by respondents to two companion surveys of money market fund managers in Europe and the US.”; The survey found that asset managers in the Pacific Rim region believe funds have become “riskier or much riskier” than previously. “Others note asset managers are buying riskier assets without necessarily understanding the risks involved, a trend facilitated by the greater availability of leveraged and structured products,” Moody’s said in a statement. As well as the competitive pressures the survey also discovered fund managers in the region were concerned with regulatory issues and meeting client needs. Despite the challenges, however, fund managers in the survey were “generally optimistic” about the industry’s future.
The $34 billion Brighter Super is set to shift a significant proportion of equities assets in MySuper from passive to active management. Chief investment officer Mark Rider says the move is possible because of the scale created by mergers, and the fund will be looking to its newly appointed active managers to generate performance through the cycle by taking idiosyncratic risks.
Darcy SongJanuary 21, 2025
