The report says that Asian investors will likely soon have an expanded repertoire of asset classes and fund structures because regulators recognize investors’ need to diversify their risk and hedge exposures.
The report cited the example of Thailand that has allowed provident funds to invest up to 15% of net asset value in commodity funds, infrastructure vehicles, and other "alternative" products.
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In the longer term, China is likely to tread a similar path, despite the fact that the China Securities Regulatory Commission has so far refused to let mutual funds expand their product range beyond long-only equities and bonds, most of which are Chinese, the reports predicts.
Cerulli said that it is of the opinion that eventually, Chinese regulators will conclude that it is in investors’ best interest for the mutual fund industry to have more room to maneuver. Chinese regulators recently gave permission for seven exchange-traded funds (ETFs) to use margin trading and short-selling.
"If that initial run goes satisfactorily, more ETFs will be allowed to do so, and this may eventually pave the way for long-short funds, such as UCITS," noted Shiv Taneja, director at Cerulli Associates.
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