Despite optimism about continued mainland-fueled growth of assets under management, most fund managers in Hong Kong still have no strategy for the Greater Bay Area.

Mainland Opportunity

Respondents are also optimistic about growth fuelled by China with one-third of surveyed respondents expecting AUM originated from the mainland to grow more than 30 percent by 2025, according to a recent report jointly made by KPMG and the Hong Kong Investment Funds Association.

Although ongoing developments in the Greater Bay Area was cited as a key growth driver – alongside capital market developments and renminbi liberalization – most had no strategy in place (79 percent).

Just 37 percent said they plan to formulate one in the next 12 months.

Tech Focus

Nearly 80 percent of respondents expect investments in technology to increase over the next 12 months with a focus on client-facing technology like digital interfaces, websites or apps (21 percent), and data (22 percent).

«Asset managers that are thinking about focusing on creating direct customer channels will need to fully understand how to leverage data from and about their customers,» said Vivian Chui, partner, head of securities & asset management, Hong Kong, KPMG China.

«The fund houses that are able to differentiate themselves from their competitors will be the ones that are able to build a strong brand that stands for high quality products and integrity, offer a great user experience, and focus on education in formats that are understandable to the investor.» 

Environmental, Social, Governance 

While still nascent, ESG investing is increasingly taking center stage as investors seek to improve the profile of their investments either for «feel good» effects or to enhance returns.

89 percent of respondents said they «agree» or «strongly agree» that offering sustainable investment products is increasingly important to clients. Still, the base remains limited with 84 percent expecting ESG allocation to represent just 5 percent of total AUM.

Resilient Growth?

More than half of fund managers surveyed said that assets under management (AUM) in the city are expected to grow 11-30 percent by 2025.

Regulatory changes, fee pressure, the rise of the Greater Bay Area (GBA) as a financial center, an aging population, and increasing connectivity were named as the top drivers, in that order.

«Hong Kong continues to be viewed as a leading asset management center,» said Andrew Weir, global head of asset management and vice-chairman of KPMG China. «Close collaboration and active engagement between industry stakeholders is key in order to take the sector to the next level.»