(Pictured: Daniel Celeghin)

The retail fund and private banking markets will overtake pension and sovereign wealth funds in importance for fund managers in the Asia Pacific region in the next five years, according to a white paper by Casey Quirk.

SWFs and other government entities have controlled the bulk of professionally managed assets to date but they will prove harder for fund managers to target because of increasing investment insourcing. Retail fund and private banking will generate close to 50 per cent of net flows in five years.

The good news for non-Asian managers selling into the region, though, is that asset allocation is evolving, with investors adding non-domestic stocks and bonds, alternatives – including property, hedge funds and private equity – and multi-asset class solutions to their portfolios.

The report, ‘Evolving Markets: A Practical Framework for Asia Pacific’, says that after local retail and private banking sources, the Australian SMSF market represents the fastest rising segment for fund managers in the region.

View full report.

Casey Quirk set up its Asia Pacific office, run by Daniel Celeghin, in Hong Kong this year. The world’s largest management consultant specializing in fund management has been researching the region from the US for years. US-based partner Ben Phillips is well known in Australia.

The report says professionally managed assets for APAC will rise from US$10 trillion to US$14 trillion by the end of 2018 and produce an estimated US$66 billion in fee revenue over the next five years. Australia, Japan and mainland China will represent two-thirds of the total revenue opportunity through 2018. They will be followed by South Korea, Hong Kong, Singapore, Taiwan and India.

Of the US$66 billion, US$10.9 billion will represent net new flows, with the rest coming from manager turnover, indicating continued strong competition within the eight major markets.