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Wednesday, May 16, 2012

Fragmented Global Markets are Slowing Growth Say ICI Panelists

Reported by Irene Park

The global market for asset management will increasingly fragment. That is the prediction of a quartet of experts who spoke at the ICI GMM on the "Managing Global Funds" panel last week in Washington, D.C.

The four mutual fund industry executives worry that the fragmentation is preventing the industry from growing more quickly. All the same, PMs like Vijay Advani, executive vice president of global advisory services at Franklin Resources [profile], stressed that "real wealth [is] being created" in growth countries, and that "we're only seeing tip of iceberg" for the potential of growth countries.

In order to hack it in growth countries, especially those outside of "Anglo-European" influence, Nikko chairman and CEO Timothy McCarthy urged companies to "out-local other locals" by hiring and training local talent and learning the local language and culture.

McCarthy pointed out that many end-users in growth markets are unaware of what mutual funds are and the concept of working with diversified portfolios -- as opposed to single products -- which can render advertising efforts moot.

"Think global, act local," summarized CEO Christian Dargnat of BNP Paribas.

Dargnat was especially adamant about the need for global regulation.

Global regulation, he and his colleagues argued, will not only offer a vehicle that is transferrable, more cost-efficient and easier to manage, but also lead the way for creating a unified voice with which to manage how societies worldwide view the asset management industry. But Dargnat's colleagues largely viewed such regulation as a long time coming, if not impossible.

"It's kind of like the chocolate industry," said Advani. "Coke tastes the same no matter where you drink it. Chocolate is a commodity, but you're always going to have a home country bias."

The ICI GMM's "Managing Global Funds" panelists also included Henderson Group's [profile] chief executive, Andrew Formica. They were moderated by Dan Waters, managing director of ICI Global. 

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