Regulators in Asian markets are considering initiatives to improve the availability of information on fees incurred by fund investors while buying fund products.
The global research and consulting firm Cerulli Associates thinks that while regional regulators mull over enhanced disclosures, there is still a long way ahead for fee-based advisory model in Asia.
Cerulli's recent research rotation to Hong Kong has noticed mixed responses to these initiatives among both asset managers and distributors.
Higher Disclosure Standards
Some asset managers, mostly those from developed markets and expanding their presence in Asia, see Hong Kong as lagging behind international markets in adopting higher standards of disclosure, and hence are pleased to see developments toward more transparency.
Other Asia-based or domestic managers, however, believe that Asian markets and investors' behavioral traits are different from those of international markets.
The Robo Option
However as the initiatives are aimed at reducing costs for end-investors, Cerulli predicts that these initiatives will begin to affect the distribution landscape over the medium to long term.
First there could be further efforts by regulators to promote exchange-traded funds as a low-cost solution to investors, and online platforms, along with robo-advisory channels.
Secondly, there will be a gradual process to migrate towards the advisory model, rather than a complete shift in the near term, unless driven by regulations.
The enhanced disclosures would help a set of investors in understanding fee structure and aid their decision making, but most investors in Asian markets showed preference to a transaction-based model, according to Cerulli's survey of retail investors conducted last year.
