"Tokenisation will be the future of asset management"

René Buehlmann
Global CEO abrdn Investments

 

Mr. Buehlmann, you are considered a great expert on Asia and China in particular. How well do you know the Swiss asset management market?

I started my career with a banking apprenticeship in Switzerland and then spent nearly 30 years at UBS before joining abrdn. During that period I held numerous roles across different divisions which also included oversight of the Swiss domestic fund distribution. I am therefore quite familiar with the local preferences and client requirements.

abrdn has been present in Switzerland since 2009 (AMAS member since 2010): How important is the Swiss sales market in relation to abrdn as a whole?

abrdn is one of the largest UK asset managers with a very strong presence, in particular across Asia and Europe. Switzerland is the headquarters for many global Swiss wealth managers, insurance companies and also has a very developed pension market. Our presence in Switzerland is therefore critical.

You joined abrdn as head of Asia, but now head the entire investment division. Where is your focus at the moment?

There are headwinds facing the entire asset management industry but we are focusing on what we can control; to deliver the best outcomes for our clients. This requires sharpening our value proposition and simplifying our offering and product suite to create a clear focus for the firm and help reduce costs. Our aim is to improve operational efficiency and deliver investment performance with clear structure and leadership.

Where do you stand in the process?

Our transformation has progressed well, albeit, investment flows are still hard to come by given the market environment. Our Equity and Multi-Asset capabilities have refocused, we are rationalising products and sub-scale funds, and we are on track to deliver significant costs reductions. We’ve adjusted our geographic footprint and entered distribution arrangements where on the ground presence is too costly. We are also divesting from non-core businesses; for example, we announced the sale of the Americas Private Equity and Venture Capital businesses in July this year and our European Private Equity business in October.

abrdn is focusing more on depth than breadth in its product range and is also concentrating on alternatives or digital assets, for example. What was the trigger for these strategic adjustments?

I believe clients are willing to pay for specialist expertise whereas the price for commoditized asset management will continue to be under pressure. So, we are clearly positioning ourselves as a global specialist asset manager with key areas of strength. With £81bn of assets in our Alternatives franchise, we are benefiting from recent repositioning. Our Private Credit strategies, amounting to £8bn AUM, have built strong demand, including in Commercial Real Estate Debt, Fund Finance, and tailored opportunities with insurers. We are also convinced that the tokenisation will be the future of asset management. We are the largest stakeholder of Archax, the first UK regulated Digital Exchange and have recently announced the creation of tokenised representations of interests in our abrdn Sterling flagship liquidity fund on the Archax platform, a milestone in our digital assets strategy.

What about the emerging markets strategy?

Given our Insurance heritage, we are a very sizeable Fixed Income investor and well known for our Equity strength: Asia and Emerging Markets, small and midcap, equity income, sustainability, and thematics. The growth opportunity in Asia is clear. We are well positioned there with strong investment performance in Emerging Markets and we are running one of the largest China A funds. We also consider bolt-on acquisitions to strengthen our position in core businesses. In June this year, we made the acquisition of the specialist healthcare fund management business of the US-based Tekla Capital. We have also identified several mega-trends in biotech and healthcare, clean tech and digital assets. Expect us to invest further in these areas.

Asia is your second home besides Switzerland: How is asset management developing there on the part of local providers?

Asset management in Asia has been growing and evolving significantly, bringing competition and a wider range of investment options to local investors. Economic growth in Asia has also increased wealth and there is now a greater demand for professional asset management services. One key mega trend is the growing democratisation of savings. From Australia, Japan and Singapore to Thailand and China, Asia’s pension markets are at different stages. Developed pension systems are moving towards more open investment architecture. As more responsibility for retirement planning rests with the individual, this increases demand for advice, plus well-structured and transparent solutions. Investors are also showing interest in sustainable investing, so ESG-focused products and ESG analysis are growing in importance. The region currently has a shortage of ESG expertise, so we are focused on helping create APAC-centric solutions and building an APAC-wide sustainability knowledge community. To do so, last year we established our Asia Sustainability institute.

Asia is a structural growth market for asset managers: What prerequisites should a Swiss provider have in order to gain a foothold there?

The Asian market is diverse and complex, so it's essential to adapt your strategies to the specific countries and cultures to succeed. It’s important to gain a deep understanding of the Asian market dynamics, including economic trends, regulatory frameworks, cultural nuances, and investor preferences. Asia is not a homogeneous entity, and each country has its own unique characteristics. Setting up local offices is key. Building partnerships with local financial institutions, distribution channels, and industry influencers can help with credibility and accessing a wider client base. abrdn is one of the first foreign asset management firms to establish a wholly owned foreign entity in China. We also set up an Insurance joint venture – Heng An Standard Life (HASL) – which holds one of the first Pension liscences granted to foreigners.

What is the investment expertise of the customers?

Investment strategies need to suit the preferences and risk appetite of Asian investors, such as global solutions and income strategies. We also aim to be the Asian sustainability expert. As highlighted earlier, we launched the abrdn Sustainability Institute in Asia in 2022. One of the key objectives is to build an APAC sustainable investing knowledge community. Of course, establishing a presence and building trust in Asia takes time. Be patient and demonstrate a long-term commitment to the region. Adapt your strategies based on market feedback and changing investor needs. We set up our first office in Asia in 1992. From humble beginnings, with one person working out of a Singapore shophouse, we now have over 100 investment professionals across nine markets in Asia Pacific.