Investors in New Zealand, Australia, Japan and Korea have more funds to choose from
The recently approved Asian Region Funds Passport, signed by New Zealand, Australia, Japan and Korea, opens the door to a flood of new investment funds and new demand for them, as the investment market has just grown multiple times in a day. With populations of approximately 127 million (Japan), 50 million (South Korea), 23 million […]
The recently approved Asian Region Funds Passport, signed by New Zealand, Australia, Japan and Korea, opens the door to a flood of new investment funds and new demand for them, as the investment market has just grown multiple times in a day.
With populations of approximately 127 million (Japan), 50 million (South Korea), 23 million (Australia) and 4.5 million (New Zealand), the potential market for investment funds in those countries is now of an economy of 205 million. New Zealand investors and fund managers are the ones getting hit with most added choice and local competition, respectively.
To offer funds offshore, fund managers will need to apply for a special license, with conditions such as having significant scale, “a track record of having offered the fund for at least five years and that the offered fund includes only highly diversified, vanilla investments”, according to the organization.
The Financial Markets Conduct Act (FMCA) will apply to any offshore fund manager based in New Zealand, Japan, South Korea, and Australia wishing to sell products to residents in the region. The FMCA is a guarantee to all countries of strong regulatory framework compliant with International Organization of Securities Commission (IOSCO) principles.
The Asian Region Funds Passport is a product of the Memorandum of Co-operation (MoC) between New Zealand, Australia, Japan, Korea, the Philippines, Singapore and Thailand after six years of international negotiation. The MoC should come into effect on 30 June 2016.
The Philippines, Signapore and Thailand are expected to join the Passport over time. According to the MoC, participating economies have up to 18 months from 30 June 2016 to implement domestic arrangements in accordance with the rules.
In 2015, Morningstar ranked countries by attractiveness for mutual fund managers. South Korea (A) was #1 in the world. Among the Asian Region Funds Passport countries, Australia (B-) was next, followed by New Zealand (C+) and Japan (C-).
