Asian investors who flee equity funds when stock markets fall may be deterred from buying bond funds out of fears of rising interest rates.
These investors may instead return to their previous "default" positions of holding their money in bank deposits, warns a consultancy.
"This would put the asset management industry back to square one in the region, after a lot of effort has been expended in recent years to mobilise people's savings toward riskier financial products," says a statement by Cerulli Associates, which made the prediction.
Fears of rising interest rates are becoming tangible, with the US Federal Reserve expected to take the lead this year. The impact of rate rises may be especially severe for asset managers in Asia, says the statement.
"Cerulli has observed that retail investors in the region have notoriously shorter-term investment horizons than their Western counterparts. Asset retention is a constant struggle, but likely more apparent in North Asian markets including China."
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