Over the past two years, the master agent market in Taiwan has remained stable, with some changes. The total number of registered funds has slightly decreased to less than one thousand as of Q1 2023. In comparison of 2022 Jun, while the growth rate of the total fund size of registered funds is around 4%, the inflow growth from Taiwanese investors is even stronger at 6%, indicating Taiwanese investors' continuous preference for mutual funds. Total assets that Taiwanese investor hold for the registered offshore funds go to USD 117bn. The top 10 fund houses notably dominate over 85% of the market, but there is still a large market share available for other fund companies to tap into. As competition intensifies, more qualified asset managers are carefully evaluating the market before deciding to enter. In a market where offshore managers rely heavily on master agents to conduct their business without a physical presence, the quality of the master agent has become increasingly crucial. As a result, changes in master agents have been observed in recent years.
Table 1: Master agent ranking as of Mar 2023
During Q1 2023, M&G (Lux) Investment Funds applied for a transfer of its master agent, although it has not yet been approved. Similarly, Robeco Capital Growth Funds, which were under the master agent platform of Nomura Securities Investment Trust Enterprise (SITE), has also applied for a change in its master agent. Both cases are currently awaiting approval from Financial Supervisory Commission (FSC). It is worth noting that Nomura is the largest platform in Taiwan that simultaneously represents five offshore asset management companies. In 2022, Janus Henderson applied to become the fifth serviced fund company of Nomura SITE due to its departure from Taiwan and the termination of its self-owned subsidiary Janus Henderson SICE. This event prompted the FSC to introduce new regulations that restrict the number of master agents for offshore funds operating in Taiwan to a maximum of five, which took effect in December 2022. In addition, master agents with four representatives are required to provide additional business security deposits to ensure compliance with the new regulation.
Nomura SITE the master agent for NN (L) series funds in Taiwan, has completed the necessary procedures to rename the funds as Goldman Sachs Series Funds in Taiwan, effective in March 2023. The name change is a result of the acquisition of NN Investment Partners, the management company of the funds, by the Goldman Sachs Group and its subsequent integration with Goldman Sachs Asset Management.
In 2022, three new fund companies submitted registration applications, and two of them have been approved by the FSC after a process that took approximately 9 months, even one of them taking more than 1 year. It has become a standard practice in the industry to allow for sufficient lead time before initiating the registration process for fund businesses in Taiwan. On the other hand, Aberdeen Standard SITE has confirmed the transfer of its domestic and overseas funds to Manulife SITE. Manulife, in addition to being the master agent of Aberdeen Standard's registered offshore funds in Taiwan, will also take over its two domestic funds. The transfer was completed in only 3 months, reflecting the regulator's intention to protect investors' rights without being affected by the departure of foreign asset management companies.
As a pioneer in helping offshore asset managers explore business opportunities in Taiwan, Navigate generally advises our partners to start with institutional business and gradually expand to the mass retail market. However, we are excited to announce that we will soon be launching a new initiative to take our partner to the next level - literally!