Consolidation trends among asset owners in Australia, along with the build up of in-house capabilities, means there will be increasing pressure on mandate opportunities, according to The Cerulli Report - Institutional Asset Management in Asia 2020: Setting the Stage for a New Era.
Dedicated relationship professionals win mandates
In such an environment, which is developing across other Asian markets as well, relationships will be key. Cerulli found that having dedicated relationship professionals is one of the most important factors for increasing the chances of winning a mandate.
“Building relationships eases the flow of communication and allows both sides to gain familiarity with one another’s workflows, expertise and needs.” Jaslyn Ong, analyst at Cerulli, said in a release about the report.
“This is especially relevant amid travel restrictions; difficulties in conducting onsite due diligence has stalled most new mandates issuances this year, and institutions have found comfort in re-investing with existing managers.”
Despite headwinds facing retirement markets in Australia and New Zealand there has still been appetite for alternative strategies, including real assets, private equity, and ESG investments.
“Although valuations have gone down, the need for super funds to seek higher-yielding and high-quality assets for their members will continue to spur demand [for alternative assets],” the report found.
Cerulli noted that Australia’s Future Fund remains committed to investing in alternatives although it was shifting towards more liquid risk assets.
“However, the fund is highly selective and looks to focus on optimizing high-conviction core manager relationships.”