HK SFC unveils report on asset management

The Securities and Futures Commission (SFC) published a second report in its risk-focused industry meeting series entitled Asset Management: Looking Forward.

The report follows a series of meetings conducted by the Risk and Strategy unit (R&S) from March to November 2014 with senior executives in the asset management industry.

The report highlights:

Solid growth in asset management, with Asia (excluding Japan and Australia) recording the most rapid global growth in assets under management over the past five years;
Importance of scale for asset managers, which in the case of Hong Kong can be achieved through greater connectivity with mainland China;
Increased demand for complex asset management products with high-yield, multi-asset, unconstrained and alternative strategies;
Increased investor focus on fees, contributing to growth in low cost and indexed products such as exchange-traded funds and passive funds;
Distribution of retail funds moving online, with indications that online platforms are introducing competition on fees;
Evolving international regulation, including focus on risk governance and risk culture of asset managers;
Varying viewpoints on systemic risk in asset management, including risks resulting from interconnectedness of the financial system and the importance of robust liquidity risk management; and
An emerging trend towards integration of environmental, social and corporate governance factors in investment risk assessment.

“As described in the report, the asset management industry is large and diverse. It is also fast evolving. The SFC will consider the topics discussed in this meeting series as part of its policy and strategic priority-setting,” said Mr Ashley Alder, the SFC’s Chief Executive Officer.