US-China Relations a Top Concern for Singapore Fund Managers, according to IMAS 2020 Investment
Managers’ Outlook Survey

– ESG investing grew in importance YoY as a future driver of growth over the next three years

– Further margin erosion seen as a top threat to growth in the investment management industry

Singapore, 7 January 2020 – Singapore investment managers ranked the state of US-China relations as their top concern this year, according to the Investment Management Association of Singapore (“IMAS”) Investment Managers’ Outlook Survey.

Now in its fifth year, the IMAS 2020 Investment Managers’ Outlook Survey takes the pulse from senior investment professionals of the biggest challenges, trends and developments in the investment management industry in Singapore. It identifies the top geopolitical and economic concerns, dominant strategies, and growth drivers for fund managers in the year ahead. This year’s survey gathered responses from 53 respondents who are mainly CEOs and CIOs of fund management companies based in Singapore.

Nearly eight in ten (79%) respondents flagged the further deterioration of US-China relations as a top concern. Very weak global growth (66%) and weakening growth in China (53%) came up as the second and third biggest concerns, respectively, for fund managers in 2020.

Rajeev De Mello, Chairman of the IMAS Development Committee, said: “When asked which countries or regions fund managers are overweighting going into 2020, compared to their benchmarks (across asset classes), China emerged as the most favoured. Despite concerns about the US-China relationship, the results show that the industry remains confident that the outcome will be positive for Asia.”

In evaluating opportunities for investment growth, Environmental, Social and Governance (ESG) adoption (68%) took the lead this year, rising in importance compared to 2019’s results. Respondents also ranked ESG or impact-focused strategies (57%) as the top strategy that will grow in popularity in 2020, eclipsing absolute return (17%) which ranked first in last year’s survey.

Other key findings from the latest IMAS 2020 Investment Managers’ Outlook Survey include:

• Threats to growth: Further margin erosion (83%) topped the list of threats to the growth of the investment management industry in Singapore in the next 12 months. The next biggest threats were poor returns compared to passive solutions (62%) and lacklustre markets (60%).
• Business impact: More than half (53%) of fund managers anticipate that rising business and regulatory compliance costs would have the most impact on their businesses in the next 12 months. Next on the list were the threat of a global economic slowdown (49%) and new distribution channels and technologies (40%). Although these were the same choices that ranked as top three in last year’s survey, rising business and regulatory compliance costs jumped from third to first place.
• Differentiation: Nearly three-quarters (72%) said they are looking to differentiate their business through product or fund design. More than half (58%) said they would differentiate by developing business lines around sustainable finance or ESG, compared to only 36% of respondents in 2019. Regional expansion (43%) emerged as the third most preferred choice in this year’s results.

Susan Soh, Chairman of IMAS, said: “Given the increasing prominence of ESG investment strategies in this year’s survey results, it looks like 2020 will be the biggest year yet for ESG. It will be one of the key themes at the upcoming 2020 IMAS-Bloomberg Investment Conference. Furthermore, in the IMAS Digital Accelerator Programme (DAP), two of the ten challenge statements are focused on ESG, so it will be exciting to see the innovative digital solutions that tech firms will create, given ESG’s rising importance in the asset management space.”

More insights related to the survey findings will be discussed at the 2020 IMAS-Bloomberg Investment Conference, slated to take place on 29 April 2020 in Singapore this year. The conference will bring together government leaders, sovereign wealth funds, venture capital firms, hedge funds, family offices and asset management firms as well as unicorns and tech innovators, to explore new investing approaches and innovative technologies. The top three tech innovators from the DAP will also get to showcase their solutions.

About the Investment Management Association of Singapore (IMAS)

Representing over 100 investment managers with assets under management in Singapore of about SGD1.3 trillion, the Investment Management Association of Singapore (IMAS) seeks to set the benchmark for the investment and fund management industry in Singapore by fostering high standards and professionalism while promoting exemplary practices among its members. IMAS was formed on 22 September 1997 and is the representative body of investment managers spearheading the development of the industry in Singapore. It serves as a forum for members in discussions as well as a collective voice where representation is needed on behalf of the investment management industry, facilitating training for its members, and contributing towards investor education.