By 2025, assets under management (AUM) in the Asia-Pacific (APAC) is set to outpace any other region globally, and almost double to $29.6 trillion by 2025, according to PwC’s Asset and Wealth Management 2025: The Asia Awakening report. The demands of APAC investors are also shifting as they look for specific outcomes and shape their investment habits accordingly.
Asia-Pacific AUM is expected to grow at a total compound annual growth rate (CAGR) of 8.7 percent to $16.9 trillion in 2020 from $15.1 trillion in 2017. activity remains relatively sanguine.
Alternative asset popularity among Asian investors is expected to boom from $2 trillion in 2017 to $6.9 trillion by 2025 (at a staggering CAGR of 11.7 percent), especially in real estate and infrastructure investments. Asia will be one of the largest infrastructure investment regions globally. This will be driven by the massive growth expected from China’s Belt and Road Initiative (BRI) and other initiatives across the region.
Passive strategies remain mainly an institutional play in Asia.
Justin Ong, Asia-Pacific asset & wealth management leader, said, “APAC investors tend to be more active and focused on returns, and are prepared to take risks to reach their targeted returns. Passive products therefore might not provide the incentives they are looking for.”
“However, the introduction of robo advisers and more digitalized fund advice will play a large role in paving the way for passive growth in the region, opening up new distribution channels and disintermediating current ones. This new order will further be bolstered as pension reforms in countries such as China continue, allowing pensions to invest in passive assets and sharply driving APAC AUM from 12 percent in 2017 to 17 percent in 2025,” Ong added.
Another finding is regional pension fund AUM is expected to grow in the APAC region from $7 trillion in 2017 to $11.9 trillion by 2025, and it is likely that more governments in the region will turn to defined contribution (DC) plans and individual retirement accounts.
