Singapore investment managers ranked the state of U.S. - China relations as their top concern this year, according to a recent survey by the Investment Management Association of Singapore. 

Nearly eight in ten (79%) respondents flagged the further deterioration of U.S.-China relations as a top concern. Very weak global growth (66%) and weakening growth in China (53%) came up as the second and third biggest concerns, respectively, for fund managers in 2020. This year's survey on outlook - now in its fifth year - gathered responses from 53 respondents, who are manly CEOs and CIOs of fund management companies in Singapore.

«When asked which countries or regions fund managers are overweighting going into 2020, compared to their benchmarks, China emerged as the most favored. Despite concerns about the U.S.-China relationship, the results show that the industry remains confident that the outcome will be positive for Asia,» said Rajeev De Mello, Chairman of IMAS Development Committee during a media briefing on Tuesday.

Areas Of Industry Growth

Environmental, Social and Governance (ESG) adoption (68%) took the lead this year, rising in importance compared to 2019's results. Respondents also ranked ESG or impact-focused strategies (57%) as the top strategy that will grow in popularity in 2020, eclipsing absolute return (17%) which ranked first in last year's survey.

«In the IMAS Digital Accelerator Program, two of the ten challenge statements are focused on ESG, so it will be exciting to see the innovative digital solutions that tech firms will create, given ESG's rising importance in the asset management space,» said Susan Soh, Chairman of IMAS. 

Other Key Findings

Now in its fifth year, the IMAS 2020 Investment Managers' Outlook Survey takes the pulse from senior investment professionals of the biggest challenges, trends, and developments in the investment management industry in Singapore. 

Besides the top three concerns stated above, the IMAS outlook survey reveals other key findings:

  • Threats to growth: Further margin erosion topped the list of threats to the growth of the investment management industry in Singapore in the next 12 months. The next biggest threats were poor returns compared to passive solutions (62%) and lackluster markets (60%)
  • Business impact: More than half of fund managers anticipate that rising business and regulatory compliance costs would have the most impact on their businesses in the next 12 months. 
  • Differentiation: Nearly three-quarters (72%) said they were looking to differentiate their business through product or fund design. More than half said they would differentiate by developing business lines around sustainable finance or ESG, compared to only 36% of respondents in 2019.