Published by Fund Selector Asia – 19th Sep 2018
Seven fund managers have joined the cross-border Asean Collective Investment Scheme since it opened in 2014.
The Asean CIS is a passporting programme that connects the fund markets of Singapore, Thailand and Malaysia.
Schroders and UOB Asset Management in Singapore are the latest firms to join the scheme, according to records from the Monetary Authority of Singapore, which did not specify the date of fund registration.
Schroders registered two funds for distribution under the scheme, the Asian Equity Yield Fund and the Singapore Trust Fund. UOB AM also has put forward two funds, the United Global Healthcare Fund and the Greater China Fund, records show.
The four products have not yet been registered for sale in Thailand and Malaysia, according to records from Thailand’s Securities and Exchange Commission and the Securities Commission of Malaysia.
FSA sought more information from Schroders and UOB AM, but they were not able to comment in time for publication on the target markets and the reasons for joining the scheme.
UOB AM has subsidiaries operating in both Malaysia and Thailand, where it manages locally-domiciled funds. In Malaysia, the firm manages $949.6m in assets and AUM in Thailand is $4.6bn, according to data from a Cerulli Associates report.
Schroders distributes products via feeder fund arrangements and is one of the top 10 master fund managers in Malaysia and Thailand, according to a separate Cerulli report. In Malaysia, it had $804m in feeder fund assets and $243.3m in Thailand as of the end of 2016, the latest figures available.
Still slow uptake
In total, there are seven fund managers participating with 16 funds in the Asean CIS scheme, according to the regulators’ records. However, only six funds have been registered for sale in a host country.
The slow uptake of the programme could be attributed to different factors. For example, foreign managers looking at Malaysia and Thailand prefer the feeder fund route. In a recent Cerulli survey, managers said they would likely lack the branding to attract local distributors if they were to join the passporting scheme.
Another reason why the passporting scheme has not gained enough traction is the difficulty of getting authorisation for a fund to be sold under the scheme, Andrew Gordon, managing director for Asia at RBC Investor and Treasury Services, told FSApreviously.
However, earlier this year the three regulators involved in the passporting scheme made various revisions to the framework, which are expected to make it easier for fund managers to participate. Revisions include lowering AUM requirements and shortening the fund application process.
Yet another passport
Separately, the Asia Regional Passporting (ARFP) scheme, which connects the markets of Australia, Japan, Korea, New Zealand and Thailand, was expected to launch last month. However, there has been no confirmation from the participating markets that the scheme has begun.
“The governments participating in the ARFP scheme have been playing a long game. They haven’t rushed to get the scheme launched,” Gordon most recently told FSA.
“I think there remains questions of whether the scheme is able to deliver a level-playing field in terms of taxation. And if you look at some of the markets involved, there is already easier availability to distribute offshore funds.”
However, he noted that passporting or cross-border schemes take time to be successful.
“It has been 30 years since Ucits [funds] were launched originally in Europe, and it is fair to say that [the structure] was not an overnight success. It took a while to build momentum,” Gordon said.
