The asset management arm of J. P Morgan plans to open its $10 billion global natural resources fund to wealthy investors and institutions in Asia this year to tap their appetite for commodities and natural resources, a senior executive said on March 01. J. P Morgan Asset Management expects a proposed change in Australian tax rules to boost funds under management for global managers, Peter Horn, Chief Executive of its Australian unit told Reuters.
The fund house split from a local partner late last year to go solo in the fast growing $1.3 trillion Australian wealth Management Market, the world's fourth largest.
"We have been active in Australia for over ten years and it was timely to expand our presence and deepen our commitment to this market," Horn said adding the Asian move for the natural resources fund will be steered by the Australian arm.
It now offers alternative investment strategies such as emerging market funds, hedge funds, property and private equity for institutional clients such as pension and insurance funds.
It relocated Stuart Connell, a senior portfolio manage from London, to Melbourne last November to help its Asian business.
"Expansion into more emerging countries has the potential to add significant funds under management into the fund," said Horn, referring to the Asian push for the Global natural resources fund.
The fund largely focuses on precious metals, energy and base metals and bases its investment thesis on massive infrastructure programmes in developing economies powering the commodity sector, a document to potential investors showed. Asian powerhouses China and India are spending billion to modernise their infrastructure.
While China is creating new high speed rail lines and at times rebuilding entire cities, India plans to spend $1.5 trillion over a decade to overhaul its power supply, pot-holed roads and bring its crowded rail network up to speed.
And Asian investors, given soaring demand in their countries for such commodities are investing heavily, sending prices to record highs.
Australia, which easily skipped a recession during the global financial crisis, thanks to the still ongoing mining boom, was among the best places to manage the natural resources funds due to its proximity to both the supply and demand drivers, Horn said.
J. P Morgan Asset Management invests $6 billion on behalf of foreign clients in Australia and manages $4 billion for Australian clients, he said.
It competes with the likes of UBS and Blackrock in a market fuelled by compulsory pension contribution of 9 percent and strong wealth creation thanks to the mining boom.
A Capgemini Merrill Lynch report said the total wealth of rich Australians increased 37 percent to $380 billion, in an indication of the wealth creation in Australia, often referred to as the lucky country. The crowded retail wealth management market is dominated by local players such as No 2 lender Commonwealth Bank of Australia's wealth management arm and fund manager AMP, but foreign players are tapped by institutions for their global reach and sophisticated products. Current Australian tax laws on income from foreign funds managed by local managers discourage foreign firms from managing global investment strategies locally.
Horn expected a change in Australian tax rules to boost the ability of Australian-based fund managers to manage global portfolios for global clients.
Federal Assistant Treasurer Bill Shorten in January said the government will ensure that the relevant investment income of a foreign fund, which uses an Australian intermediary, would not be taxed.
"The change in taxation treatment, if effectively implemented, will allow fund managers to bring the management of some regional and global portfolios onshore." Horn said.
Comments
Comments are closed.