Study: Asia Becoming a Home for Asset Owners

(March 1, 2010) – A new report from Cerulli Associates shows that global asset managers should not disregard Asia’s $747 billion pension sector.

The study predicts that investable Asia ex-Japan pension assets will grow 55% by 2013 to about $1.15 trillion.

“This is because much of Asia will age dramatically in the next few decades, creating substantial demographic pressure,” the Cerulli report said. In 2003, 6.3% of Asia’s population was over the age of 65, but in 2050, that percentage is expected to jump to 20%.

Consequently, the report said, governments will have to boost retirement savings and pension fund performance, indicating a growing role for professional fund management and overseas exposure.

Asia’s economy emerged from the financial crisis as a global leader. Between 2009 and 2013, the pool of addressable assets in Asia ex-Japan is forecast to increase by nearly 75% to $370.3 billion, according to the report. China will have the largest pool of addressable assets by 2013 with $130 billion, followed by Hong Kong, South Korea and Taiwan.

Despite the opportunities that abound in the region, profitability in Asia ex-Japan’s pension sector is often poor, especially compared with the region’s retail sector, which is about $300 billion to $400 billion larger, the Financial Times reported.

“But managers must invest time and money now, and shoulder low profitability, if they want to make the most of the Asia ex-Japan pension opportunity as it matures over the long term,” Cerulli said. The report added that since the region’s retirement marketplace is still in its early stages, global asset managers should consider Asia’s pension sector just one element of a wider institutional book.