In Asia, retail investors generally have a short-term view for their investments. Enter Capital Group – one of the world’s largest active managers with US$1.4 trillion in assets under management (AUM) – which believes there is an opportunity to change this orientation in favour of a more long term but active investment approach.

“Active management is powerful and we need to be out telling that story,” says Thomas Quantrille, Tokyo-based president of Capital Group Japan and head of business Asia-Pacific. He believes that the dynamics of the Asian markets are changing and that people as well as financial institutions will have to start looking at longer-term investment planning. This is especially true among members of a segment of the population nearing retirement age in the coming decade.

“In Asia, investors are more short-term oriented by nature. We believe that thinking long term is the way that things are going to move in Asia and it’s really what we’re about. We don’t launch funds of the day or products that investors may want but might not need,” Quantrille adds.

This is part of the reason why the Los Angeles-based Capital Group recently decided to expand beyond its institutional and private wealth management client base into the retail segment.

Capital Group has its work cut out for it since it is relatively unknown in Asia although it claims to have been operating here for the past 50 years and has had an on-the-ground presence for 30 years. It has been largely under the radar in Asia because it has historically focused on the institutional business and has traditionally sold its products through distributors and intermediaries. It has also never advertised its products and services unlike other asset managers of its size and product range.

Commitment to Asia

However, a decision has been made by the firm’s top management to take control of its own distribution, sales and support functions particularly in Asia.

Quantrille: Thinking long term is the way things are going to move in Asia

In an interview with The Asset, Quantrille says Capital Group is making sure it has the right resources to be successful with institutional and individual investors in Asia and that this commitment is absolute for the initiatives the group has under way.

“Our footprint in Asia includes six offices, over 250 associates operating in the region, and we have about US$17 billion of Asian clients’ AUM, although we actually invest over US$100 billion in Asia. We’re one of the largest unknown investment managers out there and if you look at our performance, the facts are pretty compelling that what we are doing works,” Quantrille remarks.

As part of its expansion in Asia, Capital Group in May 2014 announced the appointment of industry veteran Andrew Economos as senior vice-president, strategic solutions, Asia, based in Hong Kong. In this newly created role, he is responsible for institutional, private wealth and retail distribution for Capital Group’s business in the region. His role includes developing strategic solutions for clients, managing distribution, cultivating client relationships and supporting the development of its Asian businesses. He also joined the firm’s leadership team, which manages the business across Asia-Pacific, including Japan and Australia.

As present, it has offices and on-the-ground presence in Japan, Australia, Middle East and Asia ex-Japan which includes China, Hong Kong, Korea, Singapore, Taiwan and Southeast Asian countries.

In Japan, Capital Group is focused primarily on the institutional and mutual fund businesses established when it opened its investment trust unit in 2007.

“We went through the financial crisis shortly after we started our business. The recession actually started two days after we launched our first fund in Japan. So there was a phase where we were not launching new funds and not working actively on the retail side of the business in Japan. But we’re now quite excited about some developments, how the markets are changing,” Quantrille shares.

Japanese investors are becoming more long term in nature as a result of the regulatory developments and new distributor behaviour.

Evolving in Australia

In Australia, where Capital Group has a long-standing presence as one of the largest global equity managers, it previously distributed through third parties, but recently started taking action to ensure it is investing in resources and new capabilities for distribution.

“We took a good look at our business in Australia in 2010 and we decided if we’re going to be serious about it, we need to take control and be accountable for our business and all our distribution efforts. We opened our own office in Australia in 2011 and we have been consistently adding resources, most recently taking responsibility for all of the retail distribution. So first we took control of the institutional business and now we have direct responsibility for all our distribution efforts in Australia,” Quantrille says.

Australia’s investment profile, which is made up of long term superannuation funds, fits the investment focus of Capital Group as it is also oriented towards long-term active management. “We’re excited about Australia since they have long-term assets that by definition, have to be invested long term given the mandatory retirement contribution. We think this aligns nicely with our core DNA. So that’s absolutely our focus,” he notes.

In Asia ex-Japan, Capital Group is also expanding in the retail space particularly in Hong Kong and Singapore. “Part of why we’ve brought in Andrew (Economos) is to make sure we remain focused on both the institutional business and our developing retail business,” Quantrille says.

The expansion will see the addition of an unspecified number of staff throughout the region focusing on sales, distribution and investor solutions. “We’re in a build-out mode so you will see net new additions to our team, significant in terms of the overall effort. You’ll see both sales and service teams as well as investor solutions people added to the team focusing on Asia,” Economos reveals.

In terms of client profile, Capital Group has three types of clients, the primary group of which are global financial institutions including those that do business in Asia. “With the global financial institutions, we’re very aligned with those that operate in Europe and Asia. We serve them in a very coordinated manner, with a globally integrated approach. We work very closely with our colleagues in Europe,” Quantrille says.

Capital Group also serves private banks and distributors that cater to high net worth investors, particularly in Hong Kong and Singapore.

More recently, it is focusing on retail clients as part of efforts to grow its overall client base. “We’re now focusing more on retail distribution relationships and we are expanding our retail initiatives in Europe as well as in Asia,” the group’s business head in Asia comments.

Capital Group is known as an equity manager but it also manages fixed income assets with US$220 billion in AUM. “We’re a large diversified long-term investment management company that has proven commitment to our investors around the world and we have 15 million individual and institutional investors as part of our business,” Quantrille says.