Money in multi-asset funds in the mature funds markets of Asia has risen rapidly in recent years as investors opt for diversification and regular income.
Multi-asset funds in Hong Kong had an estimated $22 billion under management at the end of October 2014, according to research firm Cerulli Associates, nearly three times the level in 2012.
In Singapore, multi-asset funds have risen to account for more than a fifth of locally domiciled fund assets, up from a 14% share in 2012, says Cerulli.
"It was widely believed previously that these funds appealed to investors for their ability to ride out market gyrations during periods of uncertain market conditions," says Cerulli Associates. "But now, it seems that instead of the relative comfort levels that the funds' asset allocation strategies bring, it is the stable monthly income features of these products that have investors hooked."
The researchers found that multi-asset funds have not yet become popular in all Asian markets. Cerulli Associates notes that although some managers had some initial success introducing multi-asset income funds to Korea in 2013, demand had since declined, leading to net outflows for these products in 2014.
"Managers will face a challenge in selling multi-asset funds as Korean investors prefer local 'value-investing' and high dividend equity products," says the report.
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