It’s no secret that the Australian asset management industry is growing. Already the largest market in the Asia Pacific region accounting for AUD2.8 trillion in funds under management, Australia saw its funds under management double over the last decade. Increasingly, we’re seeing Australian managers launching global strategies in their quest for growth.
In the last 12 months, we saw Antipodes Partners launch a global UCITs fund, and Wilson Asset Management is readying an IPO for its $300 million WAM Global Fund, followed by many more examples. The individual reasons for each manager may vary, but the common themes we hear are inability to gain sufficient value in a concentrated Australian share market, crowded trades, and pursuit of the elusive retail money seeking diversification in their share portfolios. Following the success of several famous Australian investment management brands that have built successful global portfolios for up to 20 years, the rest of the market seems to be catching up.
In practice, though, launching a new global portfolio isn’t quite as simple as replicating a successful investment strategy and analysis, and applying those skills to picking some global companies. Going global often means rethinking your entire approach to running an investment operation. Technology is a big part of that formula.
Here are a few questions that have come up in our interactions with Australian managers considering going global that you should be considering in your own analysis.
Infrastructure
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Does my current investment technology give me real-time market access to all the markets I want to trade in?
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Does my technology allow me to see my investments in both base currency and portfolio currency so I can easily monitor the P/L across your investments and track performance?
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Can I see my portfolio while on the road, and do I have access to trade during U.S./EMEA market hours when I’m not in the office?
Brokers and Trading
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How long does it take to setup a new executing broker or prime broker for a new market? (Hint….this takes a lot longer than you may think. We have heard of KYC requirements for certain markets taking around three months to process).
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How much control do I need around trading overseas names? Do I need to think about a trading desk in another location, and are we considering an outsourced trading desk for all our U.S. names, for example?
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How do I manage my foreign exchange exposure to hedge my portfolio back to AUD?
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How do I track my research budgets and money I spend with brokers on commissions?
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How do I measure best execution and transaction cost analysis across my international trading?
Legal and Compliance
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What regulatory framework applies to me if I am trading global names?
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Are there specific rules I need to adhere to for each investment market?
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What compliance rules apply to setting up a UCITs structure?
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Will MiFID II regulations apply to me?
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What substantial shareholding disclosures apply to each market?
Middle Office
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If I currently outsource my middle office, at what time does my administrator cut the NAV of the portfolio after the U.S. market closes?
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Do I need to think about running my middle office in-house? And if so, how do I handle international dividends, corporate actions and other events? How do I handle international trade matching and at what time during the day can I reconcile with my administrator?
Going global sounds a lot easier in theory, doesn’t it? Nevertheless, it’s doable for small and large firms alike with the right technology.
Eze Software has helped clients all over the world take their business global; check out this video of our client Apex Capital in Brazil discussing the firm’s path to going global, and please get in touch.
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