In the immediate aftermath of the global financial crisis, many Asian institutions reacted to what they perceived as poor performance on the part of their external asset managers by building out internal management capabilities and moving assets in-house, finds a report by Greenwich Associates. Over the past 18 months, institutions across Asia have reversed course: They are outsourcing assets and increasing — in some cases dramatically — the number of external investment management firms they employ.
Asian institutional portfolios expanded rapidly last year, with total assets under management increasing 20% from 2010 to 2011, to a total US$7.4 trillion. Over that same period, the pool of assets allocated to external investment managers grew even faster, increasing approximately 40% among investors that were interviewed in both 2010 and 2011. As a result of that growth, the share of Asian institutional assets outsourced to external firms increased to $1.1 trillion, moving to 15% of total assets in 2011 from 11% in 2010.
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