Like many people, I have a vague long-term goal of some day living and working in New York. In lieu of actually doing something about that goal, the good news for me is that this month’s issue of Investment & Technology will be getting handed out at ‘Opportunity Australia’, a Conexus seminar where US-based funds managers can gather ammunition for their advance into Australia’s booming insto investment market.
So at least for the duration of June 19 at the Australian consulate-general’s office on East 42nd Street, I’ll be getting some advance notice for my eventual foray back the other way. Probably should do something about the photo. In any case, I think encouraging more offshore managers to try their hand in Australia is a great thing. Granted, it hasn’t been the most fashionable thing to talk about lately.
Last month’s Federal Budget was squarely focussed on helping more Australian-based managers sell their wares to the wider world, with the withholding tax rate on Aussie-domiciled trusts coming down to a Singapore-like 7.5 per cent by July 1, 2010.
Beleaguered LPT managers cried tears of relief, resources specialists kept the champagne coming, and hopefully a couple of Asian financial planners noticed. Exporting financial services is great, but let’s not lose sight of how many Australian jobs successful importers bring with them. For instance, PIMCO’s growth to 18 Australian-sourced billions in barely a decade has also been the making of the group to whom it outsources its finance department, Lumina BPO. Indeed, T.Rowe Price’s country head, Murray Brewer, says the secret of the manager’s $3.2 billion success in under two years has been “running a virtual funds management operation in Australia”.
The global growth manager has outsourced just about everything here which doesn’t involve going out and talking to clients, prospects and researchers. Baltimore HQ has obviously learned its lesson from 2005, when without an on-the-ground presence it won $1.7 billion straight-up from QIC, only to have it snatched away just as suddenly. Diversity of the client base is one of Brewer’s mantras.
At around $3 billion the wholesale global equity fund is already closed to new institutional names, with the platform-distributed retail fund (RE’d by Equity Trustees) intended to take most of the remaining $4.5 billion capacity currently allocated to the Australian business. Brewer advises newcomers to focus their message around one single product, and given the Australian wholesale and mezzanine markets’ low barriers to entry, to make that product one with a genuine differentiator – such as T.Rowe Price’s generous discretion to invest in emerging markets.
One hopes a few NY-based fundies will read this and decide Australia might be an emerging market for their own business.