Consultants’ Next Battleground: Asia

Asian investors typically don’t use consultants, but their importance is growing in the region.

Investment consultants are becoming more important to the manager selection process in Asia, an area in which such companies are traditionally underused, according to research. 

Cerulli Associates found that asset owners were using consultants in their manager selection process despite their in-house capabilities. 

“Some central banks and pension funds in Asia are increasingly using consultants as conduits to get managers, even though they can do it on their own,” said Yoon Ng, Asia research director at Cerulli.

Asian asset owners most often use consultants at the request-for-proposal and manager selection stages of their investment processes, Cerulli said.

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This meant regional asset managers have still had to get onto consultants’ buy-lists even though asset owners often have extensive in-house investment and research expertise.

Ng said consultants were seen to add a “third-party stamp of approval” to funds during the research process.

“Having said that, few Asian asset owners outsource key management aspects such as asset allocation or identifying an investment strategy to consultants due to confidentiality reasons,” Ng added, “as well as the understanding that an institution’s internal investment staff is paid to perform these duties.”

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