Fidelity returns to Singapore

The firm hopes to sell offshore funds to CPF members before the end of the year.

Fidelity Investments is setting up an office in Singapore after a six-year hiatus, says Brett Goodin, managing director in Hong Kong.

The firm closed its Singapore office in 1997 because the business opportunities didn't justify it. Local regulations required foreign firms offer a separate fund range for Singapore investors, as well as requiring them to have a minimum of investment professionals based there. Fidelity wanted to centralize its operations in Hong Kong and not spread its resources too thinly.

Since then the firm has marketed to Singaporean institutions from Hong Kong.

But this month Fidelity opened an office in the Lion City and has placed the required investment professionals. It is now applying for the full fund management licence. Once that is secured, it will apply to sell its offshore fund range into the local market, including to people investing using money from the Central Provident Fund scheme.

Although the office is small - four people - it is staffed with senior Fidelity people. The team is to be led by Andrew Jenkins, who was the firm's global fixed-income CIO in London, and is now establishing a fixed-income presence in Southeast Asia. Joining him on the equities side is Conrad Cheng, previously senior investment director in Hong Kong.

The about-face reflects Singapore's moves last year to make it more attractive as a hub for investment management. It allowed CPF money to be invested in non-Singapore dollar-denominated funds. Global money managers could access this market without a cumbersome feeder fund structures. This liberalization followed a move to let the cash market invest directly in offshore mutual funds.

Fidelity is not the first to enter the market now that controls have relaxed; last year Morgan Stanley began courting retail funds too.

Goodin says, "Singapore's retail market is not big, but it's psychologically important for us to sell our offshore funds without regulatory restrictions. Singapore is too small for a separate funds range or using complex wrappers. But if we can tap it with our existing funds, plus access local institutions and CPF money, it's well worth the effort."

He also praised the regulators, saying they have been direct and straightforward. "Singapore's bureaucracy made a conscious decision to review its regulation in order to take Singapore to the next level," he says. "The changes have been transparent, which makes us feel it's a place we can do business. If the regulator tells us to do A, B and C, there isn't a political item D that we're not aware of."

Expanding local presences

Bringing fixed-income star Jenkins out from the UK isn't just to fill a role in Singapore. Fidelity is making a broader move into domestic fixed income, says Goodin. "We see a growing appetite in Asia for a regional fixed-income product, and among global clients for Asian debt." Fidelity hadn't covered the debt markets in Asia locally, despite the presence of quality corporate borrowers, and wanted to beef up its credit research capability.

As a result, the firm has assembled a five-person team in Hong Kong led by portfolio manager Andrew Wells specializing in regional fixed income.

Separately, Fidelity has just put together a domestic Australian team to invest in domestic assets, led by Paul Taylor, the firm's top analyst in the UK who has recently relocated to Sydney. The firm has not yet begun marketing its local capability to Australian institutions or retail distributors, as it is still building an investment track record. Goodin suspects marketing won't begin for another six months or so.

He sees a role for the firm amid upheaval in Australia's funds industry, with star managers bolting to establish boutiques, and big firms merging. "There's a need for a core fund management group with a scalable process and discipline," Goodin says. He notes even the best boutique managers can't handle more than $1 billion of assets, while many of them are likely to fail over time.

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