Four years after setting up a full-fledged office in Hong Kong, Pioneer Investments has entered the Taiwan market via a distribution agreement with ING Securities Investment Management, one of the largest independent Sices (securities investment consulting enterprises) in that market.
ING already serves as a conduit for other fund managers that don't want to set up an expensive on-the-ground distribution operation, including Aberdeen Asset Management, Alliance Capital and Investec. As a Sice, ING can recommend offshore funds but can not sell them; however, it can direct clients to one of five bank networks. Taiwan's Financial Services Commission has authorized 16 of Pioneer's Luxembourg-domiciled funds to be sold there.
"And we have five more banks coming on board soon," says Edmund Lacis, regional head of international sales and distribution at Pioneer in Hong Kong. He notes all of these are among the market's most sizeable financial institutions. Based on various industry projections, Taiwan's funds industry should reach $190-200 billion by 2008, up from $110 billion today. Fund penetration rates as a percentage of household savings are rising and are now in the 9-10% range. And there's still a lot of liquidity at the banks.
In return for supporting Pioneer's fund sales, ING will get an undisclosed cut of the management fees and commissions. Lacis' colleague, Albert Sze, vice president for international sales and distribution in North Asia, will be responsible for developing Pioneer's business there.
Taiwan was the next obvious step for Pioneer, which set up offices in Hong Kong and Singapore. It also has a rep office in Beijing charged with exploring joint venture possibilities, and an office in Sydney. From Singapore it manages about $2 billion of Asian equity assets sourced globally, but has no funds authorized there. It has 34 funds authorized in Hong Kong, and is seeking local regulators' approval to introduce a fund of hedge funds to the public.
