Will the proposed Asian Regional Funds Passport be the growth engine for the fund management industry?

Thursday, October 04, 2012

This is despite a large number of potential investors in the Asian region due to the traditionally high savings rate. The proposed Asian Regional Funds Passport (ARFP) will address this opportunity by creating a resource with huge potential to grow wealth and capital streams which will allow Asian populations the ability to invest in a structure which will be able to facilitate cross border capital flows. The possibility of such a fund has been termed the ‘future growth engine’ in the global funds management industry due to the huge anticipated economic growth of the region.

 

This passport will allow access to managed funds that were previously inaccessible. It will allow consumers and fund managers more choice and ability to diversify their asset allocation and will allow the funds to access larger pools of savings.

 

This would be particularly useful to harness financial inclusion alongside China, a nation that at this time is unable to distribute foreign funds. There is huge potential to benefit peoples investment portfolios with the choice of internationally managed funds. Default options will propel this further.  

 

Barriers that need to be overcome to allow for the success of the Asian Region Funds Passport include tax structures and regulatory regimes which will have to be standardised. A single framework has to be created so that managed funds will be able to be utilised across multiple markets using the Passport.

 

Learning’s can be taken from the Undertakings for the Collective Investment of Transferable Securities (UCITS), a European structure which allows funds registered in a home country to be marketed to all other European Union countries. This uniform regulation allows consumers choice, mobility and consistency across the region using an accepted framework. The policy contains flexibility but still distinguishes that each country within the region may differ on their specific disclosure requirements.

To read what other initiatives were discussed by APEC leaders in the 19th APEC Finance Ministers' meeting in Moscow, Russia on 30 August 2012 access the Joint Ministerial Statement here.