Asia and Latin America are markets of opportunity for Canadian fund companies looking to grow their businesses, according to Christopher Hodgson, group head of global wealth management and insurance, Bank of Nova Scotia.
“There are many opportunities for growth in the industry that we can provide if we have the conviction, the will and the commitment to capitalize on the ever increasing promises of wealth that are being generated not just in Canada but abroad,” said Hodgson, who spoke at the Investment Funds Institute of Canada’s (IFIC) annual conference in Toronto on Wednesday.
Assets under management (AUM) in Asia’s fund industry currently sit at about $475 billion, said Hodgson, and is growing at an annual pace of about 15% and 20%. “They’ve slowed down recently but they are similar to what we would have experience in the 80s in the fund industry here in Canada,” he said.
To make the most of this opportunity, Scotia has recently entered into a joint venture with a Chinese bank to launch a mutual fund, a money market fund, in the next couple of weeks, said Hodgson, which will be available throughout China. As part of the partnership, Scotia provided product development expertise, risk management, compliance oversight and capital for investment.
While there are opportunities, Hodgson warns that breaking into the Asian market can be difficult. “It’s not an easy market to enter,” he said. “There are restrictions in terms of ownership levels.”
Latin America also offers Canadian fund companies growth opportunities, said Hodgson, because, like Asia, its middle class is growing quickly. As well, many countries have mandatory pension requirements and have strong assets under management levels.
“As a result, we have acquired a few pension businesses even in the last 18 months in Columbia and Peru,” he said, “and we’re developing strategies to leverage our investment management expertise in these markets.”