In Asian asset management, the only thing that stays the same is how nothing really stays the same.
While the sheer size and influence of mainland China can’t be ignored, it is Singapore and, more recently, Hong Kong, that are driving fund innovation in the region. Boosted by forward-thinking government initiatives that encourage firms to automate, embrace new technologies like tokenisation and meet the growing demand among Asian investors (and investors in Asia) for overseas exposure, they’ve experienced impressive growth. From 2022 to 2023, Singapore’s assets under management (AUM) grew by 10%, reaching over $4 trillion USD. Hong Kong’s AUM grew by over 2%, while net fund flows grew by more than 300%. Japan, Taiwan and many other APAC markets have racked up equally impressive numbers.
Behind these headlines figures is a more nuanced situation, with much of the growth being fueled by overseas investors. Seventy-seven percent of Singapore’s AUM comes from international investors, of which 89% is invested outside the country. In Hong Kong, investors outside of Mainland China and Hong Kong have consistently accounted for 54-56% of total AUM over the past five years. The exposure local investors get to overseas markets, however, pales in comparison, with access restricted by a lack of automation and interoperability, as well as cross-border regulation that adds further costs and delays. This is not the case for all firms, however, with some pulling away from their competitors and opening up a world of investment opportunities for their clients.
In 2025, Calastone commissioned a survey of asset managers, asset servicers and fund distributors across Asia, focussing primarily on Singapore and Hong Kong. We wanted to explore the challenges and opportunities within the space and understand how technology can be harnessed to better serve investors’ cross-border ambitions.
Among the respondents, almost all cited global diversification for local investors as ‘very’ or ‘extremely’ important, with 89% of respondents highlighting further expansion into APAC as a priority. Considering the growth across the region, this is understandable. This is also being driven by a desire to access the influence of the Chinese Mainland’s asset management industry, especially in Hong Kong where local regulatory bodies are making a considerable effort to further open access.
North America was the second most popular market for global diversification, with 63% of respondents seeing it as a priority market. Asian investors understandably want to cash in on the booming equity markets in North America. When asked what their priorities are when selecting investment products, they focus on returns above all else, so enabling better access to global markets is key. Likewise, the second biggest factor was ‘brand recognition/reputation’ of the fund manager. Despite the rapid growth of domestic fund markets, providing investors access to the biggest names in Western fund management can still be a significant differentiator for Asian firms.
In an attempt to meet this diversification demand, regulatory bodies across APAC have implemented swathes of new regulation. This should be commended, but there’s still work to be done: over half of our respondents cited ‘cross-border investment & market access’ as a regulatory priority. Perhaps unsurprisingly, it’s the Monetary Authority of Singapore (MAS) that has been pushing for progress. The country’s Variable Capital Company (VCC) framework was a step in the right direction, but, despite attracting considerable interest, it’s still not classified as registered by many overseas jurisdictions, which presents a major hurdle for global acceptance. Hong Kong initiatives such as the Wealth Management Connect (WMC) and Mutual Recognition of Funds (MRF) schemes, launched to open up access to Mainland China, are also in need of refinements to be truly effective.
Many of these issues stem from a lack of standardisation of digital fund infrastructure. While not unique to the Asian market, the problem is exacerbated by the region’s continued reliance on commission-based fund distribution, whether it’s front-end, back-end, or trail commissions. These varying commission structures across different jurisdictions create a fragmented landscape, further complicating the distribution and settling of cross-border transactions.
Asset managers that are able to access seamless and interoperable order routing and settlement systems will gain a huge advantage. These systems not only enhance operational resilience and scalability, but also lay the groundwork for a truly connected financial ecosystem.
To make that a reality, standardisation built on interoperability and global standards is essential, enabling smoother cross-border collaboration and allowing firms to innovate at the pace of market demands. While some networks have emerged to address these challenges, most remain confined to domestic markets, restricting Asian funds and their investors from accessing overseas opportunities. Connectivity with global reach can bridge that gap, with forward-thinking funds already partnering with third parties to support cross-border distribution and settlement.
All of this is taking place against a backdrop of almost constant product innovation. Our survey found that the two biggest factors driving competition in Asia were product innovation – particularly specialised investment products such as ETFs, REITs, and customised wealth management products – and new technology, including robo advisors and digital brokerages. The next stage of this innovation will be tokenised assets, with regulatory bodies in Singapore and Hong Kong both working to establish themselves as the region’s primary hub for tokenised products.
Initiatives like MAS’ Project Guardian and Hong Kong’s VA Funds Circular mean that the regulatory framework is in place for forward-thinking funds to take advantage of the benefits tokenisation can bring, from increased efficiency and liquidity to seamless cross-border fund transfers. Yet, despite the clear potential, just over 55% of respondents to our survey have begun working on tokenised offerings, indicating that there is still plenty of room in the market for firms to gain an early-mover advantage.
Delivering the overseas exposure that domestic investors seek will require a joint effort from the regulators and the funds they govern. The groundwork has been laid, but to fully realise the benefits, automation, interoperability, and global connectivity need to be leveraged to ensure these advancements drive impact both at home and abroad.
