The quest for returns in a low-yield global environment has pushed Asian investors to make larger alternative asset allocations in search of performance. However, many investors are sticking to traditional approaches and contending with a lack of experience and expertise. Asset servicing is also in some ways still catching up to the changing demands created by the rush to alternatives.

This paper outlines the main trends in alternatives in the Asian institutional investor context and explores how asset servicing can support new investor goals.

Key highlights of the paper include:

  • Growing appetite for private equity - Many asset owners in Asia, particularly in the insurance and pension space, are seeking increased alpha performance against the backdrop of low to negative yields seen across most developed economies. BNY Mellon's report, The Race for Assets: Alternative Investments Surge Ahead, in association with FT Remark, surveyed 450 institutional investors and investment managers about their alternative asset allocations. More than half (53%) of respondents expect allocations to alternatives to increase in the next 12 months. Of the alternative asset classes, private equity is what Asian institutions view as most promising.
  • Infrastructure Opportunities - Asia faces an infrastructure funding shortfall, which points to further potential opportunities for institutional investor participation. The new era of asset diversification has also encouraged the development of innovative financing structures such as infrastructure bonds, with an aim to provide access to long term investors to such illiquid asset classes.
  • Evolving Role of Asset Servicing Providers - The traditional role of asset servicing needs to evolve to offer clients entering the alternatives space more transparency in their fund investments.
  • Standardization Needed - Asset servicing providers can leverage technology solutions to drive standardization in the data they collect and process on behalf of clients.

Read the full paper to explore these points in depth.

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The Bank of New York Mellon Corporation published this content on 23 April 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 23 April 2018 00:11:04 UTC