Asset manager bolsters asset allocation capabilities in Asia in expectation of fundamental demographic shifts across the region
Manulife Asset Management today announces that it has appointed Sarah Lu as Head of Asset Allocation in Asia. In this newly-created, Hong Kong-based role, Sarah oversees the development and investment management of asset allocation solutions for investors across the region.
Sarah joins Manulife Asset Management from Axa Rosenberg Investment Management Asia Pacific where she spent more than 12 years managing multi-asset portfolios and where, most recently, she was head of tactical asset allocation.
Sarah’s appointment represents an expansion of Manulife Asset Management’s global asset allocation arm, the Portfolio Solutions Group, into Asia. She will spearhead the development of investment solutions that help Asian investors meet an ever-widening range of income and total return needs, through strategic and tactical asset allocation. This is important as research1 shows that Asia is grappling with aging demographics, not just in the region’s developed markets but also in many of its hitherto most youthful nations, which threaten to create a potential ‘investment black hole’ in retirement provision.
Michael Dommermuth, President of Asia at Manulife Asset Management outlines the scale of the demographic changes facing the region. He says: “By 2050, Asia is expected to be the most aged region in the world, surpassing Europe and the US in the amount of pensioners it needs to support financially. What is most surprising is that, far from being confined to recognised greying nations such as Japan and China, we believe that the challenge is destined to become truly pan-regional, even touching countries traditionally considered to be young, such as Indonesia. In 40 years’ time, the median age in almost all of the ten Asian countries and territories in which we have investment operations1 will be higher than the global median age.”
The aging Asia theme has far reaching implications for the region’s investment industry. For example, the region’s persistent and world-leading savings rates are expected to decline as dependency ratios increase and retirees have to dip into savings for retirement spending. As a result, Manulife Asset Management expects to see a shift towards income-orientated products such as high dividend equities, preferred stock funds and high yield bond funds as well as towards managed income or target yield products that achieve income stability through asset allocation.
Manulife Asset Management has extensive experience building multi-asset class solutions designed to meet specific client objectives and constraints, for example for Hong Kong’s Mandatory Provident Fund and other pension schemes in the region, and already manages more than USD5 billion in Asian asset allocation AUM. Its dedicated asset allocation unit, the Portfolio Solutions Group, now has investment professionals across the US, Canada and Asia managing over USD90 billion, globally, in asset allocation funds, making Manulife Asset Management one of the world’s leading asset allocation firms.
Michael Dommermuth continues: “Globally, Manulife Asset Management’s Portfolio Solutions Group oversees more than 100 objective-based and outcome-oriented portfolios and has built up a market-leading position in countries such as the US, where it was one of the first organisations to offer such ‘lifestyle’ investments to the 401k market. Manulife Asset Management is able to draw on this existing expertise to offer a suite of asset allocation solutions to investors across Asia, including target date, target risk and target income funds, alternative and international asset allocation portfolios, and highly customized pension solutions for corporate pension plans.”
Manulife Asset Management anticipates considerable demand both from institutions looking for tailored asset allocation solutions for defined benefit schemes and from individual investors wanting professional asset allocation to secure their retirement future.
It also anticipates that the pace of reform of state-sponsored pension schemes will intensify and that the region as a whole will see a shift away from defined benefit schemes towards defined contribution programs, much like the experience in Europe and the US. As authorities across Asia seek to address the retirement funding needs of this growing mass of retirees, the region is seeing rapid developments in its pension systems. For example, Malaysia is developing a ‘multi-pillar’ approach to its pension provision with the recent introduction of its Private Retirement Scheme (PRS). The PRS is a long-term investment program, designed to complement the country’s mandatory Employee Provident Fund as an additional, voluntary vehicle via which individuals can save for retirement.
Commenting on Sarah’s appointment, Barry Evans, CIO, Global Fixed Income and Asset Allocation says: “As an asset manager with presence across 17 countries and territories globally including 10 in Asia, we know that we can play a part in offering quality asset allocation solutions to help address the potential deficit in the region’s retirement savings. Sarah’s appointment will deepen the support we provide to our clients in this part of the world as we help them assess their long term investment needs and devise investment solutions to address them.”
Notes to editors:
1 Source: Asia Development Bank – Aging in Asia: Trends, Impacts and Responses 2009. Manulife Asset Management offers investment products in Hong Kong, China, Japan, Taiwan, Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand. Of those countries included in the scope of the research, only the Philippines is predicted by the Asia Development Bank to have a lower median age than that of the global median. Note: the Asia Development Bank research does not provide specific data for Taiwan. Asia AUM data is at as March 30, 2012, global AUM data as at March 31, 2012.
About Manulife Asset Management
Manulife Asset Management is the global asset management arm of Manulife Financial. Manulife Asset Management provides comprehensive asset management solutions for institutional investors and investment funds in key markets around the world. Manulife Asset Management also provides investment management services to affiliates’ retail clients through product offerings of Manulife and John Hancock. This investment expertise extends across a broad range of asset classes including equity, fixed income and alternative investments such as real estate, timber, farmland, as well as asset allocation strategies.
Manulife Asset Management has offices with full investment capabilities in the United States, Canada, the United Kingdom, Japan, Hong Kong, Singapore, Taiwan, Indonesia, Thailand, Vietnam, Malaysia, and the Philippines. In addition, it has a joint venture asset management business in China, Manulife TEDA. It also has operations in Australia, New Zealand, Brazil and Uruguay. John Hancock Asset Management, Hancock Natural Resource Group and Declaration Management and Research are units of Manulife Asset Management.
Manulife Asset Management was named a 2011 Bond Manager of the Year finalist in the United States by Money Management Intelligence (MMI) and Best Asian Bond House by Asia Asset Management.
As at March 31, 2012, assets under management were US$220 billion. Additional information about Manulife Asset Management can be found at ManulifeAM.com.
About Manulife Financial
Manulife Financial is a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. In 2012, we celebrate 125 years of providing clients strong, reliable, trustworthy and forward-thinking solutions for their most significant financial decisions. Our international network of employees, agents and distribution partners offers financial protection and wealth management products and services to millions of clients. We also provide asset management services to institutional customers. Funds under management by Manulife Financial and its subsidiaries were C$512 billion (US$512 billion) as at March 31, 2012. The Company operates as Manulife Financial in Canada and Asia and primarily as John Hancock in the United States.
Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘945’ on the SEHK. Manulife Financial can be found on the Internet at manulife.com.